Pork Industry Economic Update - Dr. Steve Meyer - Paragon Economics, from the Swine Forecast 2011 webinar, December 1, 2010. http://www.swinecast.com/swine-forecast-2011

1. Steve Meyer Paragon Economics Des Moines, IA Swine Forecast 2011 Dec. 1, 2010

2. Swine Forecast 2011 Pork Industry Economic Update

5. Ethanol plants are in the black – for now Nearby corn: $4.85/bu. Ethanol: $2.09/gal. Nat. Gas: $4.27/mmBtu

6. RFS is 12 bil. gal. this year, 12.6 in 2011 . . . . . . Slower growth (600 mil./yr.) thru 2015

7. Ethanol will use over 1/3 of this year’s crop

8. Corn above ethanol+DDGS rising SLOWLY . . . . . . but is offset by lower milo, barley, wheat

11. November WASDE: Lowest S/U ratio since ‘96

12. Record-large crop and record-high price!

13. Corn is now FAR above the “new” range . . . . . . So much for harvest-time seasonal lows!

14. Good SB crop but STRONG demand. . . . . SBM futures moving to TOP of new range

15. Hog feed is now $50-$70 higher than yr. ago

16. BE costs for 2011 are now at $74.81/cwt

26. VERY low percent of cuts is reported

30. All demand indexes are lower for 12 mos. . . . . . . But monthly indexes have strengthened September monthly index vs. ‘09: Pork: +1.6% Chicken: +3.5% Beef: +2.5%

31. Reason: Retail prices are finally rising . . . . . . At or near record highs and more to come!

32. Financial positions have improved . . . . . . Futures suggested 46% recovery by July

33. September Hogs and Pigs Report

34. Since mid-Oct: Slghtr up 4% from expected . . . VERY close to weekly slghtr capacity

35. Record-high market hog weights . . . . . . New corn, weather, near capacity

36. Cutout value fell sharply in Sept-Oct . . . . . . But has firmed in past 4 weeks – bottom?

37. Ditto for hog prices – but MUCH deeper . . . . . . These, too, have turned – early bottom?

38. One result – VERY good packer margins. . . . . Room for price recovery, expansion??

39. Sow slaughter has risen – no expansion . . . . . . But will stay lower than historical levels

40. Futures: ‘10 & ‘11 profits have improved but . . . . . . risk will keep expansion at bay – for now

41. Slaughter forecasts based on Sept H&P . . . . . . Larger supplies in 2011

42. Price forecasts

43. Canada and N. America herds still falling

44. Rate of decline is slowest since ‘07 . . . . . . I still expect it to stabilize at 1.2 mil. or so

45. Questions & Discussion CME’s Daily Livestock Report www.dailylivestockreport.com National Hog Farmers’ North American Preview www.nationalhogfarmer.com