International MarketingTrade Update

July 2010

2

Beef Consumption Growth

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

U.S. +4.4% or +538 Thous MT

Rest of World: +17% or nearly an additional 9 million MT which is equal to roughly 80% of U.S. production in 2010

Thous MT

Source: OECD/FAO 2010 Ag Outlook, carcass wt equivalent

Growth comparing 2009 to 2019 forecast:

3

0

10

20

30

40

50

60Kg/capita

Source: USDA/FAS 2010 estimate

Per Capita Beef ConsumptionLots of room for growth outside the U.S.

4

U.S. Export Growth Outpacing Competition January-May 2010 Beef Exports

0

100,000

200,000

300,000

400,000

500,000

600,000

2008

2009

2010

+4%-9%

+25%

+3%+18%

Source: Global Trade Atlas, excludes variety meats

Metric Tons

-45%

+17%

+3%

5

Australia’s Exports

Down 6% in first half 2010, 436,095 MT

Down 4% to Japan

Down 28% but recovering to the U.S.

Up 17% to Korea but losing Mkt Share to U.S. (exports to these top 3 markets accounted for 77% of Australia’s exports)

Down 10% to Indonesia

Largest growth: Russia and Middle East

6

Brazil’s Exports

First half total: 560,000 MT, +3.5%

Top markets: Russia, Iran, EU-27, Egypt, Hong Kong

Growth to Iran, 95,000 MT, +283%

Some recovery in EU but chilled exports are less than one quarter of shipments prior to 2008; finally over 2,000 farms approved for EU

Still seen as leading global supplier of the future

7

Canada’s Exports

Diversifying away from U.S., market access negotiation success: Hong Kong, China, VietnamTraceabilityMore cattle on feed in Canada, more slaughter fed cattle and cows to U.S.

Mexico

8

Jan-May Beef Import Status

0

50

100

150

200

250

300

350

4002008 2009 2010

Source: GTA and USMEF est, excludes variety meats

Thous MT

-15%

+21%

+4%

-7%-21%

+1%

+20%

-5%

+20%

+9%

9

Who is the Competition?

Importing country: Top suppliers, 2009 market share

Mexico: U.S. 80%, Can 16%Canada: U.S. 66%, NZ 18%, Aus 7%, Urg 7%Japan: Aus 75%, U.S. 14%, NZ 6%Korea: Aus 58%, U.S. 26%, NZ 14%Hong Kong/Vietnam: India 35%, U.S. 23%, Bz 22%

10

U.S. Beef Exports, Recovery

0

200

400

600

800

1,000

1,200

1,400Variety Meats

Beef

Source: USDA/USMEF

Thousand MT2010F: beef +17%, variety meats steady= 1 MMT, +12% valued at $3.7 billion, +21%; just 3% less than ‘03

11

U.S. Beef Exports to Top Markets

0

50

100

150

200

250

300

350

400

200320092010F

Source: USDA/USMEF Forecast, thousand MT, includes variety meats

Thous MT

12

Lost beef export value due to BSE (2004-2010)

Japan: $8 billion (-$70 million/month currently)Korea: $4.7 billionOthers: >$1 billion

Total: ~$14 billion(based on annual export value compared to 2003; estimated for 2004 through 2010)

Source: USDA/FAS data; USMEF estimates

13

Exports are up this year…Weekly U.S. beef exports through July 15

6%

6%4%

26%

18%

14%

14%

12%

MEXICO

KOREA

JAPAN

VN/HK

CANADA

TAIWAN

RUSSIA

OTHER

1. Mexico -10%2. Korea +114%3. Japan +29%4. Vietnam/HK +39%5. Canada 0%6. Taiwan +27%7. Russia: 16,746 MT

(already a new annual record)

Total: +26%

Source: USDA/FAS Weekly Export Report

Mexico

Japan

KoreaVN/HK

Canada

Taiwan

Russia

14

Weekly U.S. Beef Exports to Asia*

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1/10

2/10

3/10

4/10

5/10

6/10

7/10

8/10

9/10

10/1

011

/10

12/1

0

2008

2009

2010

Source: USDA/FAS, metric tons, *Korea, Japan, Vietnam, Hong Kong, Taiwan

Jan-July 15, 2010: +52%

15

Growth Led By Korea & Japan

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1/7/

2010

1/21

/201

0

2/4/

2010

2/18

/201

0

3/4/

2010

3/18

/201

0

4/1/

2010

4/15

/201

0

4/29

/201

0

5/13

/201

0

5/27

/201

0

6/10

/201

0

6/24

/201

0

7/8/

2010

JapanVietnam/HK

Taiwan

2010 Weekly Beef Exports to Top Asian Markets

Source: USDA/FAS

Metric Tons

Korea

16

Weekly Short Rib Prices

$1.00$1.20$1.40$1.60$1.80$2.00$2.20$2.40$2.60$2.80$3.00$3.20$3.40$3.60$3.80

2007

2008

2009

2010

Source: USDA/AMS $/pound

Adding ~$15-$20/head

17

$293 $229 $360

$223

Cutout: $1.54/lb 800 lb carcass

$28$58

$41

Total Cut-out Value $1,232

+$133 from year-ago! +$39 from Chuck! +$37 from Rib +$24 from Round +$21 from Loin

Maximizing Carcass Value

18

U.S. Monthly Meat Exports to Mexico

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

Pork

Poultry

Beef

Source: USDA/USMEF, GTA, Metric Tons, includes variety meats

Still a price-sensitive market

19

Asia Has Been the Growth Market Weekly U.S. Beef Exports

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Mexico

Asia

Source: USDA/FAS, metric tons

20

Weekly U.S. Beef Exports to Russia, back in business

0200400600800

1,000

1,2001,4001,6001,8002,000

2008

2009

2010

Source: USDA/FAS, metric tons

16,746 MT through July 15, 2010 surpassing 2008 annual record: 15,644 MT

21

Who will meet the growing global demand?

-20%

-15%

-10%

-5%

0%

5%

10%Forecast Change in Beef Production 2010/2009

22

Production Trends for the Top Beef Exporters

0

2,000

4,000

6,000

8,000

10,000

12,000

U.S.

Brazil

Argentina

Australia

Canada

Thous MT

23

Export Dependence?

0%

2%

4%

6%

8%

10%

12%

14%

2000 2002 2004 2006 2008 2010 2012 2014

Source: USDA/USMEF, percent of beef muscle cuts exported

24

Export Dependence?

0%

10%

20%

30%

40%

50%

60%

70%

Brazil

Australia

U.S.

Canada

Uruguay

Argentina

2010 Estimated Exports as Percent of Production

25

A Challenge to the U.S. Industry

-150

-100

-50

0

50

100

150

200

Change in U.S. Production Change in Global BeefImports

(1,000 MT)

-1.3%

+4%

Source: USDA Ag Outlook, Feb 2010, carcass weight equivalent

2012 Forecasts