JBS PowerPoint Presentation

COMMODITY CORNER
August 2016
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
$/ Bushel
U.S. AGRICULTURAL PRICES RECEIVED: CORN
SOURCE: USDA, CME GROUP
$7.50
$7.00
$6.50
$6.00
$5.50
$5.00
$4.50
$4.00
$3.50
$3.00
Corn for Grain
CBOT Corn Futures
─ Corn market reflecting large supply.
2
1920/21
1922/23
1924/25
1926/27
1928/29
1930/31
1932/33
1934/35
1936/37
1938/39
1940/41
1942/43
1944/45
1946/47
1948/49
1950/51
1952/53
1954/55
1956/57
1958/59
1960/61
1962/63
1964/65
1966/67
1968/69
1970/71
1972/73
1974/75
1976/77
1978/79
1980/81
1982/83
1984/85
1986/87
1988/89
1990/91
1992/93
1994/95
1996/97
1998/99
2000/01
2002/03
2004/05
2006/07
2008/09
2010/11
2012/13
2014/15
2016/17
Billion Bushels
CORN PRODUCTION, U.S.
SOURCE: USDA
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Production
─ USDA still projecting record large crop.
3
$ / Cwt.
$264
$262
$260
$258
$256
$254
$252
$250
$248
$246
$244
$242
$240
$238
$236
$234
$232
$230
$228
$226
$224
$222
$220
$218
$216
$214
$212
$210
$208
$206
$204
$202
$200
$198
$196
$194
$192
$190
01/09/16
01/16/16
01/23/16
01/30/16
02/06/16
02/13/16
02/20/16
02/27/16
03/05/16
03/12/16
03/19/16
03/26/16
04/02/16
04/09/16
04/16/16
04/23/16
04/30/16
05/07/16
05/14/16
05/21/16
05/28/16
06/04/16
06/11/16
06/18/16
06/25/16
07/02/16
07/09/16
07/16/16
07/23/16
07/30/16
08/06/16
08/13/16
08/20/16
08/27/16
09/03/16
09/10/16
09/17/16
09/24/16
10/01/16
10/08/16
10/15/16
10/22/16
10/29/16
11/05/16
11/12/16
11/19/16
11/26/16
12/03/16
12/10/16
12/17/16
12/24/16
12/31/16
U.S. COMPREHENSIVE BOXED BEEF CUTOUT VALUE: CHOICE ONLY
SOURCE: USDA
2016
2015
─ YOY declines represent great value.
4
Formula Sales Volume as a % of Total Sales Volume
08/05/16
03/05/16
10/05/15
05/05/15
12/05/14
07/05/14
02/05/14
09/05/13
04/05/13
11/05/12
06/05/12
01/05/12
08/05/11
03/05/11
10/05/10
05/05/10
12/05/09
07/05/09
02/05/09
09/05/08
04/05/08
11/05/07
06/05/07
01/05/07
08/05/06
03/05/06
10/05/05
05/05/05
12/05/04
07/05/04
02/05/04
09/05/03
04/05/03
11/05/02
06/05/02
01/05/02
Percent of Total
U.S. COMPREHENSIVE BEEF CUTOUT: FORMULA SALES AS A PERCENT
OF TOTAL SALES VOLUME
SOURCE: USDA
65%
60%
55%
50%
45%
40%
35%
30%
25%
Formula Sales Volume as a % of Total Sales Volume, 52 Week Average
─ About 1/2 beef still trading on formula.
5
$10
01/09/16
01/16/16
01/23/16
01/30/16
02/06/16
02/13/16
02/20/16
02/27/16
03/05/16
03/12/16
03/19/16
03/26/16
04/02/16
04/09/16
04/16/16
04/23/16
04/30/16
05/07/16
05/14/16
05/21/16
05/28/16
06/04/16
06/11/16
06/18/16
06/25/16
07/02/16
07/09/16
07/16/16
07/23/16
07/30/16
08/06/16
08/13/16
08/20/16
08/27/16
09/03/16
09/10/16
09/17/16
09/24/16
10/01/16
10/08/16
10/15/16
10/22/16
10/29/16
11/05/16
11/12/16
11/19/16
11/26/16
12/03/16
12/10/16
12/17/16
12/24/16
12/31/16
$ / Cwt.
U.S. COMPREHENSIVE BOXED BEEF CUTOUT: PRIME MINUS CHOICE
SOURCE: USDA
$42
$40
$38
$36
$34
$32
$30
$28
$26
$24
$22
$20
$18
$16
$14
$12
2016
2015
Avg2011-2015
─ Prime demand solid, reflected in wide premium to Choice
6
0%
Jul-16
Oct-15
Jan-15
Apr-14
Jul-13
Oct-12
Jan-12
Apr-11
Jul-10
Oct-09
Jan-09
Apr-08
Jul-07
Oct-06
Jan-06
Apr-05
Jul-04
Oct-03
Jan-03
Apr-02
Jul-01
Oct-00
Jan-00
Apr-99
Jul-98
Oct-97
Jan-97
Apr-96
Jul-95
Oct-94
Jan-94
Apr-93
Jul-92
Oct-91
Jan-91
Apr-90
Jul-89
Oct-88
Jan-88
Percent
U.S. BEEF EXPORTS AS A PERCENT OF US BEEF PRODUCTION
SOURCE: USDA
14%
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
Beef Exports % Production
─ US still exporting about 10% of production
7
Jan-87
Oct-87
Jul-88
Apr-89
Jan-90
Oct-90
Jul-91
Apr-92
Jan-93
Oct-93
Jul-94
Apr-95
Jan-96
Oct-96
Jul-97
Apr-98
Jan-99
Oct-99
Jul-00
Apr-01
Jan-02
Oct-02
Jul-03
Apr-04
Jan-05
Oct-05
Jul-06
Apr-07
Jan-08
Oct-08
Jul-09
Apr-10
Jan-11
Oct-11
Jul-12
Apr-13
Jan-14
Oct-14
Jul-15
Apr-16
US $ / Pound
U.S. RETAIL ALL FRESH BEEF PRICE
SOURCE: USDA
$6.50
$6.00
$5.50
$5.00
$4.50
$4.00
$3.50
$3.00
$2.50
$2.00
─ Retail prices steady.
Retail Beef Price, All Fresh
8
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Million Head
CATTLE PLACEMENTS, U.S.
SOURCE: USDA
2.600
2.400
2.200
2.000
1.800
1.600
1.400
1.200
Cattle Placements in Feedlots (Million Head)
─ Low summer placements lead to smaller fall & winter supply
9
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Million Head
CATTLE SLAUGHTER, U.S.
SOURCE: USDA
2.400
2.300
2.200
2.100
2.000
1.900
1.800
1.700
1.600
US Cattle Slaughter, Fed Cattle
─ Slaughter peaking, expect seasonally lower into fall
10
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Million Head
COW SLAUGHTER, U.S.
SOURCE: USDA
0.590
0.540
0.490
0.440
0.390
0.340
US Cattle Slaughter, Cows
─ Cow slaughter at lowest point, will increase into fall
11
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Million Head
STEER + HEIFER SLAUGHTER, U.S.
SOURCE: USDA
2.900
2.800
2.700
2.600
2.500
2.400
2.300
2.200
2.100
US Cattle Slaughter, Total
─ Fed supply peaking, will decline into fall / winter.
12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Percent of Total
CATTLE SLAUGHTER, U.S.: PERCENT BY CLASS
SOURCE: USDA
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
US Cattle Slaughter, Fed Cattle, % of Cattle Slaughter
US Cattle Slaughter, Cows, % of Cattle Slaughter
─ Mix will be changing - less fed cattle and more cows
13
STEER CARCASS WEIGHT, U.S.
SOURCE: USDA, JBS
930
920
910
Pounds
900
890
880
870
860
850
Jan
Feb
Mar
2014
Apr
2015
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Steer Carcass Weight Projection based on Trend + Seasonal
─ Weights back on trend and will be well below last year's above
trend record.
14
U.S. FED STEER PRICE AND CME LIVE CATTLE FUTURES PRICE
SOURCE: USDA AND CME GROUP
$175.00
$170.00
$165.00
$160.00
$155.00
$150.00
$/Cwt. Live
$145.00
$140.00
$135.00
$130.00
$125.00
$120.00
$115.00
$110.00
$105.00
Fed Steer Price, $/Cwt. Live
Oct-17
Jul-17
Apr-17
Jan-17
Oct-16
Jul-16
Apr-16
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
$100.00
CME Live Cattle Futures, $/Cwt.
─ Futures market reflects a cyclical increase in supply
15
2007 JFM
2007 AMJ
2007 JAS
2007 OND
2008 JFM
2008 AMJ
2008 JAS
2008 OND
2009 JFM
2009 AMJ
2009 JAS
2009 OND
2010 JFM
2010 AMJ
2010 JAS
2010 OND
2011 JFM
2011 AMJ
2011 JAS
2011 OND
2012 JFM
2012 AMJ
2012 JAS
2012 OND
2013 JFM
2013 AMJ
2013 JAS
2013 OND
2014 JFM
2014 AMJ
2014 JAS
2014 OND
2015 JFM
2015 AMJ
2015 JAS
2015 OND
2016 JFM
2016 AMJ
2016 JAS
2016 OND
2017 JFM
2017 AMJ
2017 JAS
2017 OND
Billion Pounds
BEEF PRODUCTION, U.S.
SOURCE: USDA, WASDE
7.000
6.800
6.600
6.400
6.200
6.000
5.800
5.600
5.400
5.200
5.000
US Beef Production (Billion Pounds)
US Beef Production (Billion Pounds), 4 Qtr Avg
─ USDA projecting smaller supplies next 2 quarters.
16
2007 JFM
2007 AMJ
2007 JAS
2007 OND
2008 JFM
2008 AMJ
2008 JAS
2008 OND
2009 JFM
2009 AMJ
2009 JAS
2009 OND
2010 JFM
2010 AMJ
2010 JAS
2010 OND
2011 JFM
2011 AMJ
2011 JAS
2011 OND
2012 JFM
2012 AMJ
2012 JAS
2012 OND
2013 JFM
2013 AMJ
2013 JAS
2013 OND
2014 JFM
2014 AMJ
2014 JAS
2014 OND
2015 JFM
2015 AMJ
2015 JAS
2015 OND
2016 JFM
2016 AMJ
2016 JAS
2016 OND
2017 JFM
2017 AMJ
2017 JAS
2017 OND
Billion Pounds
PORK PRODUCTION, U.S.
SOURCE: USDA, WASDE
7.000
6.500
6.000
5.500
5.000
4.500
4.000
US Pork Production (Billion Pounds)
US Pork Production (Billion Pounds), 4 Qtr Avg
─ USDA projecting large Q4 pork supply.
17
2007 JFM
2007 AMJ
2007 JAS
2007 OND
2008 JFM
2008 AMJ
2008 JAS
2008 OND
2009 JFM
2009 AMJ
2009 JAS
2009 OND
2010 JFM
2010 AMJ
2010 JAS
2010 OND
2011 JFM
2011 AMJ
2011 JAS
2011 OND
2012 JFM
2012 AMJ
2012 JAS
2012 OND
2013 JFM
2013 AMJ
2013 JAS
2013 OND
2014 JFM
2014 AMJ
2014 JAS
2014 OND
2015 JFM
2015 AMJ
2015 JAS
2015 OND
2016 JFM
2016 AMJ
2016 JAS
2016 OND
2017 JFM
2017 AMJ
2017 JAS
2017 OND
Billion Pounds
BROILER PRODUCTION, U.S.
SOURCE: USDA, WASDE
11.000
10.500
10.000
9.500
9.000
8.500
8.000
US Chicken Production (Billion Pounds)
US Chicken Production (Billion Pounds), 4 Qtr Avg
─ USDA forecasting smaller poultry supply balance of 2016
18
2007 JFM
2007 AMJ
2007 JAS
2007 OND
2008 JFM
2008 AMJ
2008 JAS
2008 OND
2009 JFM
2009 AMJ
2009 JAS
2009 OND
2010 JFM
2010 AMJ
2010 JAS
2010 OND
2011 JFM
2011 AMJ
2011 JAS
2011 OND
2012 JFM
2012 AMJ
2012 JAS
2012 OND
2013 JFM
2013 AMJ
2013 JAS
2013 OND
2014 JFM
2014 AMJ
2014 JAS
2014 OND
2015 JFM
2015 AMJ
2015 JAS
2015 OND
2016 JFM
2016 AMJ
2016 JAS
2016 OND
2017 JFM
2017 AMJ
2017 JAS
2017 OND
Billion Pounds
BEEF + PORK + BROILER PRODUCTION, U.S.
SOURCE: USDA, WASDE
23.500
23.000
22.500
22.000
21.500
21.000
20.500
20.000
19.500
19.000
US Beef + Pork + Chicken Production (Billion Pounds)
US Beef + Pork + Chicken Production (Billion Pounds), 4 Qtr Avg
─ USDA projecting large total meat supply last half 2016
19
MAKING YOUR WORLD STRONGER
20