Broiler Exports - The Poultry Federation
A view of the state of the Poultry Industry
A 2-Slide Fact Sheet on Tyson • $27 billion of revenue • Diversified producer of chicken, beef and pork
• Produce one out of every four pounds of these meats consumed in the US • One of the most recognized brands in the US retail channel
• Growth opportunities in the international channel
FY 08 Sales by Segment Prepared Foods 10% Pork 13%
Beef 44%
Chicken 33%
FY 08 Sales by Channel Other 6% International 14%
Foodservice 32%
Consumer Products 48%
Tyson 20%
Tyson 23%
Others 24%
Tyson 17% Others 28% JBS 11%
Others 44%
Pilgrim's Pride 22%
JBS Swift 20% Sanderson Farms Perdue 8% 6%
Chicken Market Share
Excell 22% National 11%
Beef Market Share
Hormel 8%
Excel (Cargill) 9%
Smithfield 27%
Pork Market Share
Data for US market only. Chicken data per WATT Poultry 2008; does not reflect current production levels. Beef data from Cattle Buyers Weekly Top 30 Beef Packers 2007, adjusted down 4 000 head per day to account for closure of Tyson Fresh Meats' Emporia, KS slaughter facility. Pork data from Cattle Buyers Weekly Commercial Hog Slaughter 2006 (most recent available) 1 Pro Forma for acquisition of Swift and Smithfield Beef operations and pending acquisition of National Beef
Chicken Outlook
RTC Production Trend vs. Per Capita Consumption RTC Broiler Production vs. Per Capita Consumption 40,000
90 Industry RTC Pounds Per Capita Consumption
88
35,000
86
84 25,000 82 20,000 80 15,000 78
Per Capita Consumption
RTC Pounds (millions)
30,000
10,000 76 5,000
74
0
72 1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1999 - 2008 Grow th (Pounds in millions)
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Industry RTC Pounds
29,741
30,495
31,266
32,240
32,749
34,063
35,365
35,752
36,126
36,906
78
78
78
82
83
85
87
88
86
84
Per Capita Consumption Notes:
(1) Industry RTC Production Pounds from EMI Analytics (per calendar year). (2) Per Capita Consumption from EMI Analytics (per calendar year).
TYSON – CONFIDENTIAL
Pounds
% Change
7,165
24.1%
Stable Demand ??? Total Annual U.S. Per Capita Consumption (pounds) Chicken
Beef
Pork
100
90
80
70
60
50
40
Source: FAPRI, January, 2009
TYSON – CONFIDENTIAL
2016P
2014P
2012P
2010P
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
30
Close up View Per Capita Consumption Forecast Food & Agriculture Policy Research Institure (FAPRI) Per Capita Consumption Forecast 90
Beef Pork Chicken
85
Per Capita Consumption (Retail Weight)
80
75
70
65
60
55
50
45
40 1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Beef
65.6
66.6
67.4
67.7
66.2
67.6
64.8
66.0
65.3
65.6
65.3
64.0
64.1
64.4
64.7
64.7
64.2
63.7
63.2
62.7
62.2
Pork
47.8
51.4
52.6
51.1
50.2
51.4
51.7
51.2
49.9
49.3
50.6
51.4
51.1
50.4
49.8
49.8
50.1
50.3
50.5
50.2
50.1
Chicken
71.3
71.9
76.2
76.8
76.6
80.5
81.4
84.1
85.5
87.0
84.9
85.5
85.6
85.6
86.1
86.4
86.6
86.6
86.8
87.1
87.4
**Published in January 2009
TYSON – CONFIDENTIAL
US Broiler Marketing Channels 2008 estimate Pet Food/Rendering 12%
Export Shipments 15%
Other 1%
Retail Grocery 37%
Foodservice 35%
Sales and Production Update Most Major Macro Economic Indicators Continue to Be Negative Most current indicators continue to be negative. Even the positive indicators have caveats the rise in financial profits and in disposable personal income are both influenced by government stimulus, and part of the rise in spending is attributable to the rise in gas prices.
• • • • • •
Negative Falling consumer confidence Continued decline of GDP Nonfinancial profits continue to fall Unemployment continues to rise Flat new home sales Stock prices not progressing
Neutral • Inflation rate negative for last 3 months • Federal funds rate continues to be low • Gas prices still below last year’s levels—but have risen 67% from beginning of year
• •
• •
Positive Profits rise in financial sector May rise in disposable personal income and spending Retail & foodservice sales were up 0.5% in May Existing home sales rose in May—though they were off from last year
Sales and Production Update Early Spring Economic Optimism Has Leveled Off, and Did Not Bring About a Rise in Spending •
The number of Americans who feel the economy is getting better has hovered at the 34%-38% level since early April. Currently, this number has dipped to 33%.
• Daily consumer spending remains relatively low compared to this point in 2008. Stimulus rebate checks were being issued at this time.
Sales and Production Update In Foodservice, Real Sales Growth and Traffic Continue to be Negative… • May ’09 saw a third consecutive month of nominal foodservice sales growth (vs. the same month in the previous year). • This still translated into a real sales decrease of 3.1%.
• In the 3-month period ending May, traffic fell in total restaurants and across all major restaurant segments
-2.6% drop in traffic
Traffic PCYA - Total Restaurants 3.0 2.0
2.1 1.3
1.0
0.9
1.6 0.6
0.9
0.6
0.4
0.5
0.7
0.0 -1.0
-0.8
-2.0
-1.5
-3.0 MAM 06
JJA 06
SON 06
DJF 07
MAM 07
JJA 07
SON 07
DJF 08
MAM 08
JJA 08
SON 08
DJF 09
-2.6 MAM 09
Sales and Production Update Third Quarter 2009 in Summary
Most macro indicators continue to be negative.
Though it appears to have leveled off, consumers’ economic optimism rose in the spring of 2009. This rise in optimism did not bring about a rise in daily reported spending.
Operators’ expectations for the future rose from January through April, but a fall in May indicates a potential waning of these expectations.
Real sales growth and traffic continue to be negative in the latest reported periods. Very few major chains have been able to sustain same-store sales growth.
There is some good news for operators: Food prices remain lower than they were a year ago, and May saw a slight increase in restaurant spending.
Retail Category Overviews EXECUTIVE SUMMARY
Dollar Volume % Chg. % Chg. YAGO YAGO Frozen Fully Cooked 13 Week
7.5%
2.9%
26 Week
6.7%
2.0%
52 Week
5.9%
1.1%
13 Week
-0.6%
0.1%
26 Week
3.0%
4.2%
52 Week
1.5%
1.9%
13 Week
4.5%
5.5%
26 Week
3.6%
4.8%
52 Week
1.2%
3.1%
13 Week
2.6%
-2.7%
26 Week
3.3%
-2.8%
52 Week
2.8%
-4.2%
13 Week
-7.2%
-10.1%
26 Week
-8.6%
-12.9%
52 Week
-9.7%
-14.8%
13 Week
-0.9%
-2.0%
26 Week
-0.9%
-1.9%
52 Week
0.9%
-0.4%
IF Chicken
Bacon
Lunchmeat
Refrigerated Dinner Meats
Refrigerated Ingredient Meats
•
Category trends are continuing to strengthen, posting positive trends for both dollar and volume gains for the past 3 periods.
•
Latest 13 week trends are flat to declining, slowing the overall growth observed for the latest 26 week timeframe.
•
Category trends are improving with the summer months; positive sales trends for all periods against year ago totals.
•
Lunchmeat volume trends are declining though dollar sales are up due to mix and price increases.
•
Dinner Meats category continues to suffer negative sales trends with volume down double digits for the latest 13 week period, although trends are becoming stronger in the near term.
•
Refrigerated Ingredient Meats category continued the 26 week trend in the latest 13 weeks, posting similar declines in both dollar and volume losses.
Source: Nielsen Scan, Total US +$2MM, 6/27/09
Retail Category Overviews (cont’d.) Dollar Volume % Chg. % Chg. YAGO YAG
Fresh Meat Total
EXECUTIVE SUMMARY
13 Week 26 Week 52 Week
-0.9% 1.5% 2.1%
-0.4% 1.6% 0.9%
•
The Fresh Meat category showed some softness possibly driven by the economic downturn.
13 Week 26 Week 52 Week
-0.2% 2.1% 1.7%
0.6% 1.7% 0.0%
•
Fresh Beef, the largest protein, has mixed results; dollars were down but volume improved. Retailer promoted pricing was lower this year vs. YAG, lower prices drove volume improvement but dollars didn’t keep pace.
13 Week 26 Week 52 Week
-1.3% 1.2% 3.3%
-0.7% 2.4% 3.2%
•
Fresh Chicken, #2 in dollar share, experienced both dollar and volume declines, the 1st in several periods.
13 Week 26 Week 52 Week
-5.0% 0.1% 1.7%
-4.1% 1.1% 0.4%
•
Fresh Pork, a distant #3 in dollar share, declined more than any other protein except value added.
13 Week 26 Week 52 Week
10.3% 5.3% 5.7%
10.3% -0.8% -1.0%
•
Value Added experienced significant declines, Pork is the largest protein in this category, thus Value Added is reflecting the overall declines from the Pork category.
13 Week 26 Week 52 Week
-7.8% -2.1% 0.2%
-8.6% -2.2% -1.1%
Fresh Beef
Fresh Chicken
Fresh Pork
Fresh Turkey
Fresh Value Added
Source: The Perishable Group 6/27/09
Retail Category Overviews (cont’d.) Dollar Volume % Chg. % Chg. YAGO YAGO
Refrigerated Pizza 13 Week 26 Week 52 Week
12.3% 12.5% 12.6%
3.2% 3.4% 2.4%
EXECUTIVE SUMMARY •
•
Frozen Pizza 13 Week 26 Week 52 Week
4.6% 4.9% 4.1%
-1.0% -0.7% -3.8%
Refrigerated Pizza showing a solid trend in double-digit dollar sales growth with volume up slightly and showing a relatively stable trend in the past 13 weeks as consumers opt for take and bake convenience. Frozen Pizza dollar trend is steady; volume has declined in each of the past 3 periods.
Source: Nielsen Scan, Total US +$2MM, 6/27/09
Domestic Distribution – Most whole birds and white meat remain in US – Recession altering long-term trend of increasing value-added breast meat sales through foodservice
– Demographic changes & price concerns gradually increasing domestic dark meat demand EMI Broiler Outlook Conference, April 16, 2009 Copyright © EMI, All Rights Reserved
Broiler Average Liveweight USDA, during month 5.7
5.5
5.3 pounds
July 2009 forward forecast
5.1
4.9
4.7
4.5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Long term shift in live weight distribution continues as producers work to maximize breast meat production. Broiler Sales Program By Number of Birds 2000
Small (3.98) 32%
Parts Whole & Debone (5.06) 24%
Tray Pack (5.31) 31%
Large Debone (6.59) 13%
Broiler Sales Program By Number of Birds 2008
Small (4.05) 32%
Parts Whole & Debone (5.29) 22%
Average Live Weight in Parenthesis
Tray Pack (5.73) 24% Large Debone (7.63) 22%
Long term shift in live weight distribution continues as producers work to maximize breast meat production. Broiler Sales Program By Pounds Produced 2000
Small (3.98) 25%
Parts Whole & Debone (5.06) 25%
Tray Pack (5.31) 32%
Large Debone (6.59) 18%
Broiler Sales Program By Pounds Produced 2008
Small (4.05) 23%
Parts Whole & Debone (5.29) 21%
Average Live Weight in Parenthesis
Tray Pack (5.73) 25%
Large Debone (7.63) 31%
Broiler Exports – Good international demand and a weak dollar generated record exports in 2008. – Most exports are leg quarters, contributing to record dark meat markets for 2008. – Biggest volumes & dollars currently tied to a handful of markets. – Potential drop to Russia, plus global recession, likely mean lower exports in 2009. EMI Broiler Outlook Conference, April 16, 2009 Copyright © EMI, All Rights Reserved
Global Meat Consumption Per Capita
Source: FAO, FAPRI, OCED
M MT
Global Meat Producers – China’s leads due to its enormous pork production
Source: FAO, FAPRI, OCED
M MT
Global Meat Exporters – Brazil leads the world in beef and chicken exports
Source: FAO, FAPRI, OCED
Globally, meat consumption is forecast to increase by more than 2% per annum between 2005 and 2015 or over 60 billon metric tons • Demand growth from diet change combined with population growth
• Meat consumption to increase 6 kg or ~13 lbs ..per capita between 2005 and 2015 • Poultry continues to take share from beef, albeit at a reduced rate. Pork gains due to China
Source: FAO, FAPRI, OCED
• ~ 20% more feed grains will be needed to meet this demand
Some Conclusions… • Rising standards of living and urbanization in the developing world will result in increased meat consumption • Growth in meat demand combined with growing biofuel demand lead to intensified competition for inputs • Long term: New available arable land in Brazil and yield improvements globally will occur, however, commodity
prices will likely remain high in the short term as protein consumption and biofuels both continue to grow.
• China is a dominant factor in global commodity consumption and Brazil in global production today. Both will grow in importance long term.
Percent of US Dark Meat Exported 50% 45% 40% 35% 30% 25% 20% 15% June 2009 forward forecast
10% 5% 1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Quarterly US Broiler Exports 40% 34% 28% 28%
30%
percent change
22%
20%
18%
17% 13%
10%
16%
14% 12% 8% 6%
3%
10%
9%
8% 5%
3%
2% 1%
0% -2%
-2%
-4% -5% -7%
-5%
-10% -13%
-14% -14%
-4% -8% -11%
June 2009 forward forecast
-20%
2003
2004
2005
2006
2007
2008
2009
2010
UB Broiler Exports, Annual
Billion Pounds RTC
excludes paws 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
Other Iraq Korea
June 2009 forward forecast
Hong Kong Ukraine Cuba Lithuania Angola Turkey Canada Mexico China Russia
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
cents per pound
USDA Wednesday Georgia Dock 92 90 88 86 84 82 80 78 76 74 72 70 68 66 64 62 60 58 56 54 52 50 2000
April 2009 forward forecast
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
EMI B/S Breast Meat unsized, fresh 260 240
cents per pound
220 Aug 2009 forward forecast
200 180 160 140 120 100 80 2003
2004
2005
2006
2007
2008
2009
2010
EMI Fresh Wings drummette/midjoint 165 155
cents per pound
145 135 125 115 105 95 85 2005
Aug 2009 forward forecast
2006
2007
2008
2009
2010
EMI Leg Quarters 60 55
cents per pound
50 45 40 35 30 25 20 15 10 2003
Aug 2009 forward forecast
2004
2005
2006
2007
2008
2009
2010
US Broiler RTC Production, Annual 40 35 July 2009 forward forecast
billion pounds
30 25 20 15 10 5 0 1980
1985
1990
1995
2000
2005
2010
Broiler Chicks Placed, 19 State USDA 19-state report, 2 wk moving average 185
180
million head per week
175
170
165
160 8/8/09 forward forecast
155
150 Jan
Feb
Mar
Apr
May
Jun
2007
Jul
2008
Aug
Sep
2009
Oct
Nov
Dec
Broiler Hatchery Supply Flock USDA, average during month
59,000
58,000
USDA 000 hens, DM
57,000
56,000
55,000
54,000
53,000
52,000
July 2009 forward forecast
51,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Weekly Broiler Hatchability EMI Analytics Analysis of USDA and Industry Data 86.0% 85.8%
percent change
85.6% 85.4% 85.2% 85.0% 84.8% 84.6% 84.4% 84.2% 84.0% 83.8% 83.6% 83.4%
8/8/2009 forward forecast
83.2% 83.0% Jan
Feb
Mar
Copyright © EMI Analytics, All Rights Reserved
Apr
May
Jun
2007
Jul
2008
Aug
2009
Sep
Oct
Nov
Dec
Broiler Cutout Value vs Whole Broiler 90 Wing Leg Qtr Bone-In Breast Monday Georgia wtd average
80
Cutout Value cents/lb
70 60 50 40 30 20
April 2009 forward forecast
10 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 EMI Broiler Outlook Conference, April 16, 2009 Copyright © EMI, All Rights
US Whole Broiler Production Cost EMI Analytics model, weighted average, with OH & interest 85 2006 avg. 2007 avg. 2008 avg. 2009 avg. 2010 avg.
80
cents/lb
75
60 cents 68 cents 79 cents 74 cents 74 cents
70 65
Aug 2009 forward forecast
60 55 50 45 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Feed 46%
Broiler Production Cost Structure WOG basis 2008
Grower Payment 10% Chick 8%
Other 8%
Plant Costs 28%
Corn ($/bu) 8.00 7.50 7.00 6.50
6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50
$3.265 (8/11/09)
11% of Production
33% of Production
U.S. Corn Yield (bu/acre) 170 160 150 140
159.5 bu/acre
130 120 110 100 90 80 70 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
U.S. Corn Production ( MM bu) 14,000
13,038
12,761
12,101 12,000
10,000
8,000
6,000
4,000
2,000
0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Soy Meal ($/ton) 500
450
400
350
300
250
200
$383.2 (8/11/09)
U.S. Soybean Yield (bu/acre) 45
40
41.7 bu/acre 35
30
25
20 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
U.S. Soybean Production ( MM bu) 3,500
3,197
3,199
2,959 3,000
2,677
2,500
2,000
1,500
1,000
500
0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
World Coarse Stocks/Use Ratio 35%
30%
25%
20%
15%
10%
5%
0% 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
World Soybean Stock/Use Ratio 25%
20%
15%
10%
5%
0% 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Average Broiler Industry Profitability Index calculated index ration, weighted marketing mix
12 10
Aug 2009 forward forecast
Index (98-00 base)
8 6 4 2 0 -2 -4 -6
--Cost structure is industry average cost & production mix --Revenue calculations are wholesale spot market --Results will not reflect individual firms, and are best used as a trend indicator
-8 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
A Quick Look at Beef
Beef Cow Inventory / Dairy Cow Inventory
Long Term Supply Index Beef Cow Inventory
40,000
Dairy Cow Inventory
11,500
39,000
11,000
000 HEAD
38,000 37,000
10,500
36,000
10,000
35,000 34,000
9,500
33,000
9,000
32,000 8,500
31,000 30,000
8,000 80
82
84
86
88
90
Source: USDA Projected 2009
92
94
96
98
00
YEARS
02
04
06
08 Source: USDA Projected 2009
YEARS
July 1, 2009 COF On Feed
95% of year ago
9.752MM vs 10.295MM July 1, 2008
Placed
92% of year ago
1.391MM vs 1.518MM
Marketed 100.6% of year ago
1.989MM vs 1.978MM
Sales and Production Update Cattle on Feed
USA Cattle on Feed Lots w/Capacity>1,000 Head First of Month, 2004-2008 Avg., 2007, 2008, 2009 Thousand Head
13,000 2004-2008 Average
2007
2008
2009
12,500 12,000 11,500 11,000 10,500 10,000 9,500 9,000 8,500 8,000 JAN
FEB
MAR
APR
MAY
JUN
JLY
AUG
SEP
OCT
NOV
DEC
Sales and Production Update Imported Beef Volumes
Pork Outlook
Sales and Production Update April CAN-US Breeding Herd
BREEDING HERDS: U.S., CANADA & COMBINED 2000
Thous. Head, U.S. and Combined
-4.6% from Oct '07 8500
1900
8000
1800 1700
7500
1600
7000
1500 6500
1400
6000
1300 U.S. Total Canada
5500 5000 4500 1996
1200 1100 1000
1998
2000
2002
2004
2006
2008
Thous. Head, Canada
9000
Sales and Production Update YTD Pork Exports
YTD PORK EXPORTS - PRODUCT WT. JANUARY - APRIL
1100 1000 Mil. lbs. -- World
900
400 WORLD TOTAL CANADA KOREA RUSSIA CHINA/HONG KONG
AUSTRALIA JAPAN MEXICO TAIWAN
-7.8% 4.6%
360 320 280
800
55.0%
700
240
600
200
500
-60.5% 160
400
120
300 80
200
40
100 0
0 2003
2004
2005
2006
2007
2008
2009
Mil. lbs. -- Indiv. Countries
1200
Sales and Production Update Finished Hog Margins / Breakeven
Summary • Cattle supplies likely to be lower • Hog producer woes to continue leading to lower hog supplies… some day • Global recession restricting demand • Production costs at a new plateau • Bird weight increases likely to stay
A 2-Slide Fact Sheet on Tyson • $27 billion of revenue • Diversified producer of chicken, beef and pork
• Produce one out of every four pounds of these meats consumed in the US • One of the most recognized brands in the US retail channel
• Growth opportunities in the international channel
FY 08 Sales by Segment Prepared Foods 10% Pork 13%
Beef 44%
Chicken 33%
FY 08 Sales by Channel Other 6% International 14%
Foodservice 32%
Consumer Products 48%
Tyson 20%
Tyson 23%
Others 24%
Tyson 17% Others 28% JBS 11%
Others 44%
Pilgrim's Pride 22%
JBS Swift 20% Sanderson Farms Perdue 8% 6%
Chicken Market Share
Excell 22% National 11%
Beef Market Share
Hormel 8%
Excel (Cargill) 9%
Smithfield 27%
Pork Market Share
Data for US market only. Chicken data per WATT Poultry 2008; does not reflect current production levels. Beef data from Cattle Buyers Weekly Top 30 Beef Packers 2007, adjusted down 4 000 head per day to account for closure of Tyson Fresh Meats' Emporia, KS slaughter facility. Pork data from Cattle Buyers Weekly Commercial Hog Slaughter 2006 (most recent available) 1 Pro Forma for acquisition of Swift and Smithfield Beef operations and pending acquisition of National Beef
Chicken Outlook
RTC Production Trend vs. Per Capita Consumption RTC Broiler Production vs. Per Capita Consumption 40,000
90 Industry RTC Pounds Per Capita Consumption
88
35,000
86
84 25,000 82 20,000 80 15,000 78
Per Capita Consumption
RTC Pounds (millions)
30,000
10,000 76 5,000
74
0
72 1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1999 - 2008 Grow th (Pounds in millions)
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Industry RTC Pounds
29,741
30,495
31,266
32,240
32,749
34,063
35,365
35,752
36,126
36,906
78
78
78
82
83
85
87
88
86
84
Per Capita Consumption Notes:
(1) Industry RTC Production Pounds from EMI Analytics (per calendar year). (2) Per Capita Consumption from EMI Analytics (per calendar year).
TYSON – CONFIDENTIAL
Pounds
% Change
7,165
24.1%
Stable Demand ??? Total Annual U.S. Per Capita Consumption (pounds) Chicken
Beef
Pork
100
90
80
70
60
50
40
Source: FAPRI, January, 2009
TYSON – CONFIDENTIAL
2016P
2014P
2012P
2010P
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
30
Close up View Per Capita Consumption Forecast Food & Agriculture Policy Research Institure (FAPRI) Per Capita Consumption Forecast 90
Beef Pork Chicken
85
Per Capita Consumption (Retail Weight)
80
75
70
65
60
55
50
45
40 1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Beef
65.6
66.6
67.4
67.7
66.2
67.6
64.8
66.0
65.3
65.6
65.3
64.0
64.1
64.4
64.7
64.7
64.2
63.7
63.2
62.7
62.2
Pork
47.8
51.4
52.6
51.1
50.2
51.4
51.7
51.2
49.9
49.3
50.6
51.4
51.1
50.4
49.8
49.8
50.1
50.3
50.5
50.2
50.1
Chicken
71.3
71.9
76.2
76.8
76.6
80.5
81.4
84.1
85.5
87.0
84.9
85.5
85.6
85.6
86.1
86.4
86.6
86.6
86.8
87.1
87.4
**Published in January 2009
TYSON – CONFIDENTIAL
US Broiler Marketing Channels 2008 estimate Pet Food/Rendering 12%
Export Shipments 15%
Other 1%
Retail Grocery 37%
Foodservice 35%
Sales and Production Update Most Major Macro Economic Indicators Continue to Be Negative Most current indicators continue to be negative. Even the positive indicators have caveats the rise in financial profits and in disposable personal income are both influenced by government stimulus, and part of the rise in spending is attributable to the rise in gas prices.
• • • • • •
Negative Falling consumer confidence Continued decline of GDP Nonfinancial profits continue to fall Unemployment continues to rise Flat new home sales Stock prices not progressing
Neutral • Inflation rate negative for last 3 months • Federal funds rate continues to be low • Gas prices still below last year’s levels—but have risen 67% from beginning of year
• •
• •
Positive Profits rise in financial sector May rise in disposable personal income and spending Retail & foodservice sales were up 0.5% in May Existing home sales rose in May—though they were off from last year
Sales and Production Update Early Spring Economic Optimism Has Leveled Off, and Did Not Bring About a Rise in Spending •
The number of Americans who feel the economy is getting better has hovered at the 34%-38% level since early April. Currently, this number has dipped to 33%.
• Daily consumer spending remains relatively low compared to this point in 2008. Stimulus rebate checks were being issued at this time.
Sales and Production Update In Foodservice, Real Sales Growth and Traffic Continue to be Negative… • May ’09 saw a third consecutive month of nominal foodservice sales growth (vs. the same month in the previous year). • This still translated into a real sales decrease of 3.1%.
• In the 3-month period ending May, traffic fell in total restaurants and across all major restaurant segments
-2.6% drop in traffic
Traffic PCYA - Total Restaurants 3.0 2.0
2.1 1.3
1.0
0.9
1.6 0.6
0.9
0.6
0.4
0.5
0.7
0.0 -1.0
-0.8
-2.0
-1.5
-3.0 MAM 06
JJA 06
SON 06
DJF 07
MAM 07
JJA 07
SON 07
DJF 08
MAM 08
JJA 08
SON 08
DJF 09
-2.6 MAM 09
Sales and Production Update Third Quarter 2009 in Summary
Most macro indicators continue to be negative.
Though it appears to have leveled off, consumers’ economic optimism rose in the spring of 2009. This rise in optimism did not bring about a rise in daily reported spending.
Operators’ expectations for the future rose from January through April, but a fall in May indicates a potential waning of these expectations.
Real sales growth and traffic continue to be negative in the latest reported periods. Very few major chains have been able to sustain same-store sales growth.
There is some good news for operators: Food prices remain lower than they were a year ago, and May saw a slight increase in restaurant spending.
Retail Category Overviews EXECUTIVE SUMMARY
Dollar Volume % Chg. % Chg. YAGO YAGO Frozen Fully Cooked 13 Week
7.5%
2.9%
26 Week
6.7%
2.0%
52 Week
5.9%
1.1%
13 Week
-0.6%
0.1%
26 Week
3.0%
4.2%
52 Week
1.5%
1.9%
13 Week
4.5%
5.5%
26 Week
3.6%
4.8%
52 Week
1.2%
3.1%
13 Week
2.6%
-2.7%
26 Week
3.3%
-2.8%
52 Week
2.8%
-4.2%
13 Week
-7.2%
-10.1%
26 Week
-8.6%
-12.9%
52 Week
-9.7%
-14.8%
13 Week
-0.9%
-2.0%
26 Week
-0.9%
-1.9%
52 Week
0.9%
-0.4%
IF Chicken
Bacon
Lunchmeat
Refrigerated Dinner Meats
Refrigerated Ingredient Meats
•
Category trends are continuing to strengthen, posting positive trends for both dollar and volume gains for the past 3 periods.
•
Latest 13 week trends are flat to declining, slowing the overall growth observed for the latest 26 week timeframe.
•
Category trends are improving with the summer months; positive sales trends for all periods against year ago totals.
•
Lunchmeat volume trends are declining though dollar sales are up due to mix and price increases.
•
Dinner Meats category continues to suffer negative sales trends with volume down double digits for the latest 13 week period, although trends are becoming stronger in the near term.
•
Refrigerated Ingredient Meats category continued the 26 week trend in the latest 13 weeks, posting similar declines in both dollar and volume losses.
Source: Nielsen Scan, Total US +$2MM, 6/27/09
Retail Category Overviews (cont’d.) Dollar Volume % Chg. % Chg. YAGO YAG
Fresh Meat Total
EXECUTIVE SUMMARY
13 Week 26 Week 52 Week
-0.9% 1.5% 2.1%
-0.4% 1.6% 0.9%
•
The Fresh Meat category showed some softness possibly driven by the economic downturn.
13 Week 26 Week 52 Week
-0.2% 2.1% 1.7%
0.6% 1.7% 0.0%
•
Fresh Beef, the largest protein, has mixed results; dollars were down but volume improved. Retailer promoted pricing was lower this year vs. YAG, lower prices drove volume improvement but dollars didn’t keep pace.
13 Week 26 Week 52 Week
-1.3% 1.2% 3.3%
-0.7% 2.4% 3.2%
•
Fresh Chicken, #2 in dollar share, experienced both dollar and volume declines, the 1st in several periods.
13 Week 26 Week 52 Week
-5.0% 0.1% 1.7%
-4.1% 1.1% 0.4%
•
Fresh Pork, a distant #3 in dollar share, declined more than any other protein except value added.
13 Week 26 Week 52 Week
10.3% 5.3% 5.7%
10.3% -0.8% -1.0%
•
Value Added experienced significant declines, Pork is the largest protein in this category, thus Value Added is reflecting the overall declines from the Pork category.
13 Week 26 Week 52 Week
-7.8% -2.1% 0.2%
-8.6% -2.2% -1.1%
Fresh Beef
Fresh Chicken
Fresh Pork
Fresh Turkey
Fresh Value Added
Source: The Perishable Group 6/27/09
Retail Category Overviews (cont’d.) Dollar Volume % Chg. % Chg. YAGO YAGO
Refrigerated Pizza 13 Week 26 Week 52 Week
12.3% 12.5% 12.6%
3.2% 3.4% 2.4%
EXECUTIVE SUMMARY •
•
Frozen Pizza 13 Week 26 Week 52 Week
4.6% 4.9% 4.1%
-1.0% -0.7% -3.8%
Refrigerated Pizza showing a solid trend in double-digit dollar sales growth with volume up slightly and showing a relatively stable trend in the past 13 weeks as consumers opt for take and bake convenience. Frozen Pizza dollar trend is steady; volume has declined in each of the past 3 periods.
Source: Nielsen Scan, Total US +$2MM, 6/27/09
Domestic Distribution – Most whole birds and white meat remain in US – Recession altering long-term trend of increasing value-added breast meat sales through foodservice
– Demographic changes & price concerns gradually increasing domestic dark meat demand EMI Broiler Outlook Conference, April 16, 2009 Copyright © EMI, All Rights Reserved
Broiler Average Liveweight USDA, during month 5.7
5.5
5.3 pounds
July 2009 forward forecast
5.1
4.9
4.7
4.5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Long term shift in live weight distribution continues as producers work to maximize breast meat production. Broiler Sales Program By Number of Birds 2000
Small (3.98) 32%
Parts Whole & Debone (5.06) 24%
Tray Pack (5.31) 31%
Large Debone (6.59) 13%
Broiler Sales Program By Number of Birds 2008
Small (4.05) 32%
Parts Whole & Debone (5.29) 22%
Average Live Weight in Parenthesis
Tray Pack (5.73) 24% Large Debone (7.63) 22%
Long term shift in live weight distribution continues as producers work to maximize breast meat production. Broiler Sales Program By Pounds Produced 2000
Small (3.98) 25%
Parts Whole & Debone (5.06) 25%
Tray Pack (5.31) 32%
Large Debone (6.59) 18%
Broiler Sales Program By Pounds Produced 2008
Small (4.05) 23%
Parts Whole & Debone (5.29) 21%
Average Live Weight in Parenthesis
Tray Pack (5.73) 25%
Large Debone (7.63) 31%
Broiler Exports – Good international demand and a weak dollar generated record exports in 2008. – Most exports are leg quarters, contributing to record dark meat markets for 2008. – Biggest volumes & dollars currently tied to a handful of markets. – Potential drop to Russia, plus global recession, likely mean lower exports in 2009. EMI Broiler Outlook Conference, April 16, 2009 Copyright © EMI, All Rights Reserved
Global Meat Consumption Per Capita
Source: FAO, FAPRI, OCED
M MT
Global Meat Producers – China’s leads due to its enormous pork production
Source: FAO, FAPRI, OCED
M MT
Global Meat Exporters – Brazil leads the world in beef and chicken exports
Source: FAO, FAPRI, OCED
Globally, meat consumption is forecast to increase by more than 2% per annum between 2005 and 2015 or over 60 billon metric tons • Demand growth from diet change combined with population growth
• Meat consumption to increase 6 kg or ~13 lbs ..per capita between 2005 and 2015 • Poultry continues to take share from beef, albeit at a reduced rate. Pork gains due to China
Source: FAO, FAPRI, OCED
• ~ 20% more feed grains will be needed to meet this demand
Some Conclusions… • Rising standards of living and urbanization in the developing world will result in increased meat consumption • Growth in meat demand combined with growing biofuel demand lead to intensified competition for inputs • Long term: New available arable land in Brazil and yield improvements globally will occur, however, commodity
prices will likely remain high in the short term as protein consumption and biofuels both continue to grow.
• China is a dominant factor in global commodity consumption and Brazil in global production today. Both will grow in importance long term.
Percent of US Dark Meat Exported 50% 45% 40% 35% 30% 25% 20% 15% June 2009 forward forecast
10% 5% 1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Quarterly US Broiler Exports 40% 34% 28% 28%
30%
percent change
22%
20%
18%
17% 13%
10%
16%
14% 12% 8% 6%
3%
10%
9%
8% 5%
3%
2% 1%
0% -2%
-2%
-4% -5% -7%
-5%
-10% -13%
-14% -14%
-4% -8% -11%
June 2009 forward forecast
-20%
2003
2004
2005
2006
2007
2008
2009
2010
UB Broiler Exports, Annual
Billion Pounds RTC
excludes paws 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
Other Iraq Korea
June 2009 forward forecast
Hong Kong Ukraine Cuba Lithuania Angola Turkey Canada Mexico China Russia
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
cents per pound
USDA Wednesday Georgia Dock 92 90 88 86 84 82 80 78 76 74 72 70 68 66 64 62 60 58 56 54 52 50 2000
April 2009 forward forecast
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
EMI B/S Breast Meat unsized, fresh 260 240
cents per pound
220 Aug 2009 forward forecast
200 180 160 140 120 100 80 2003
2004
2005
2006
2007
2008
2009
2010
EMI Fresh Wings drummette/midjoint 165 155
cents per pound
145 135 125 115 105 95 85 2005
Aug 2009 forward forecast
2006
2007
2008
2009
2010
EMI Leg Quarters 60 55
cents per pound
50 45 40 35 30 25 20 15 10 2003
Aug 2009 forward forecast
2004
2005
2006
2007
2008
2009
2010
US Broiler RTC Production, Annual 40 35 July 2009 forward forecast
billion pounds
30 25 20 15 10 5 0 1980
1985
1990
1995
2000
2005
2010
Broiler Chicks Placed, 19 State USDA 19-state report, 2 wk moving average 185
180
million head per week
175
170
165
160 8/8/09 forward forecast
155
150 Jan
Feb
Mar
Apr
May
Jun
2007
Jul
2008
Aug
Sep
2009
Oct
Nov
Dec
Broiler Hatchery Supply Flock USDA, average during month
59,000
58,000
USDA 000 hens, DM
57,000
56,000
55,000
54,000
53,000
52,000
July 2009 forward forecast
51,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Weekly Broiler Hatchability EMI Analytics Analysis of USDA and Industry Data 86.0% 85.8%
percent change
85.6% 85.4% 85.2% 85.0% 84.8% 84.6% 84.4% 84.2% 84.0% 83.8% 83.6% 83.4%
8/8/2009 forward forecast
83.2% 83.0% Jan
Feb
Mar
Copyright © EMI Analytics, All Rights Reserved
Apr
May
Jun
2007
Jul
2008
Aug
2009
Sep
Oct
Nov
Dec
Broiler Cutout Value vs Whole Broiler 90 Wing Leg Qtr Bone-In Breast Monday Georgia wtd average
80
Cutout Value cents/lb
70 60 50 40 30 20
April 2009 forward forecast
10 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 EMI Broiler Outlook Conference, April 16, 2009 Copyright © EMI, All Rights
US Whole Broiler Production Cost EMI Analytics model, weighted average, with OH & interest 85 2006 avg. 2007 avg. 2008 avg. 2009 avg. 2010 avg.
80
cents/lb
75
60 cents 68 cents 79 cents 74 cents 74 cents
70 65
Aug 2009 forward forecast
60 55 50 45 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Feed 46%
Broiler Production Cost Structure WOG basis 2008
Grower Payment 10% Chick 8%
Other 8%
Plant Costs 28%
Corn ($/bu) 8.00 7.50 7.00 6.50
6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50
$3.265 (8/11/09)
11% of Production
33% of Production
U.S. Corn Yield (bu/acre) 170 160 150 140
159.5 bu/acre
130 120 110 100 90 80 70 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
U.S. Corn Production ( MM bu) 14,000
13,038
12,761
12,101 12,000
10,000
8,000
6,000
4,000
2,000
0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Soy Meal ($/ton) 500
450
400
350
300
250
200
$383.2 (8/11/09)
U.S. Soybean Yield (bu/acre) 45
40
41.7 bu/acre 35
30
25
20 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
U.S. Soybean Production ( MM bu) 3,500
3,197
3,199
2,959 3,000
2,677
2,500
2,000
1,500
1,000
500
0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
World Coarse Stocks/Use Ratio 35%
30%
25%
20%
15%
10%
5%
0% 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
World Soybean Stock/Use Ratio 25%
20%
15%
10%
5%
0% 80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Average Broiler Industry Profitability Index calculated index ration, weighted marketing mix
12 10
Aug 2009 forward forecast
Index (98-00 base)
8 6 4 2 0 -2 -4 -6
--Cost structure is industry average cost & production mix --Revenue calculations are wholesale spot market --Results will not reflect individual firms, and are best used as a trend indicator
-8 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
A Quick Look at Beef
Beef Cow Inventory / Dairy Cow Inventory
Long Term Supply Index Beef Cow Inventory
40,000
Dairy Cow Inventory
11,500
39,000
11,000
000 HEAD
38,000 37,000
10,500
36,000
10,000
35,000 34,000
9,500
33,000
9,000
32,000 8,500
31,000 30,000
8,000 80
82
84
86
88
90
Source: USDA Projected 2009
92
94
96
98
00
YEARS
02
04
06
08 Source: USDA Projected 2009
YEARS
July 1, 2009 COF On Feed
95% of year ago
9.752MM vs 10.295MM July 1, 2008
Placed
92% of year ago
1.391MM vs 1.518MM
Marketed 100.6% of year ago
1.989MM vs 1.978MM
Sales and Production Update Cattle on Feed
USA Cattle on Feed Lots w/Capacity>1,000 Head First of Month, 2004-2008 Avg., 2007, 2008, 2009 Thousand Head
13,000 2004-2008 Average
2007
2008
2009
12,500 12,000 11,500 11,000 10,500 10,000 9,500 9,000 8,500 8,000 JAN
FEB
MAR
APR
MAY
JUN
JLY
AUG
SEP
OCT
NOV
DEC
Sales and Production Update Imported Beef Volumes
Pork Outlook
Sales and Production Update April CAN-US Breeding Herd
BREEDING HERDS: U.S., CANADA & COMBINED 2000
Thous. Head, U.S. and Combined
-4.6% from Oct '07 8500
1900
8000
1800 1700
7500
1600
7000
1500 6500
1400
6000
1300 U.S. Total Canada
5500 5000 4500 1996
1200 1100 1000
1998
2000
2002
2004
2006
2008
Thous. Head, Canada
9000
Sales and Production Update YTD Pork Exports
YTD PORK EXPORTS - PRODUCT WT. JANUARY - APRIL
1100 1000 Mil. lbs. -- World
900
400 WORLD TOTAL CANADA KOREA RUSSIA CHINA/HONG KONG
AUSTRALIA JAPAN MEXICO TAIWAN
-7.8% 4.6%
360 320 280
800
55.0%
700
240
600
200
500
-60.5% 160
400
120
300 80
200
40
100 0
0 2003
2004
2005
2006
2007
2008
2009
Mil. lbs. -- Indiv. Countries
1200
Sales and Production Update Finished Hog Margins / Breakeven
Summary • Cattle supplies likely to be lower • Hog producer woes to continue leading to lower hog supplies… some day • Global recession restricting demand • Production costs at a new plateau • Bird weight increases likely to stay
