1. Steve R. Meyer, Ph.D. Vice-President, Pork Analysis EMI Analytics World Pork Expo -- 2016 Livestock & Poultry Outlook

2. Macro variables are a mixed bag...  Latest labor market numbers are SOFT (?) -May employment grew by only 38,000 – October thru March averaged 239,000! -Labor force is record large but participation rate is still under 63% -- near record low -Unemployment rate dropped to 4.7%  Real personal disposable income is still growing – 2.5% YTD after 2.63% in ‘15  Median real household income, though, is down 7.2% from ‘98 peak, 6.5% vs. ‘07

3. Consumer attitudes have not improved...

4. 3-species RPCE was down, yr/yr, again in April..... Reversion to the mean but still on uptrend

5. Beef, chicken still down in April, pork gained...

6. Pork uptrend is still intact as well – for now...

7. Nice yr/yr gain for pork share of RPCE in April...... YTD ‘16 average is 25.7% vs. 28.8% in ‘15

8. ‘15 was the year of a BIG jump in avail/cons....... growth in ‘16 will be smaller – ’17 ????

9. Prices INCREASED in March – not by much...... but reflects continuing strong demand!

10. Pork still has a big advantage on beef at retail...

11. EMI Analytics Broiler Outlook Sue Trudell Vice President, EMI Analytics strudell@emianalytics.com

12. Supply flock: +1.9% in ’15 but +0.5 & 0.6% next 2 yrs

13. Weight growth slowing to <1% this year...

14. Output growth slowing: 2.6% to 1.1% to 0.6% in ‘17

15. Exports will rebound – but remain short of ‘14

16. Small increase in PC supply in ‘16 – none in ’17 & ‘18

17. Steady prices for whole birds...

18. Some growth for breast meat prices...

19. And continued trouble for leg quarters...

20. EMI Analytics Turkey Outlook Amanda Martin Senior Analyst amartin@expressmarketsinc.com

21. ‘15 HPAI losses have made turkey PROFITABLE!

22. Quite logical reaction: Higher output!

23. Total turkey output +4% in ‘16, +3.5% in ‘17...

24. And exports have NOT RECOVERED AT ALL...

25. Some pressure on whole birds – more in ‘17...

26. BIG pressure on breast meat – impact on hams?

27. EMI Analytics Beef and Pork Outlook Steve R. Meyer, Ph.D. Vice President, Pork Analytics smeyer@emianalytics.com

28. Weather is still a key factor for beef...... And conditions are great! – better even in CA!

29. Record low national poor/very poor ratings

30. Cow/calf profits: Tremendous incentive to grow!

31. Beef cow numbers are back above 30 million...... After falling from 33 to 29 million!

32. And feeder cattle supplies have FINALLY increased

33. May COF: Higher numbers, sales & more current! 7.5% 1.1 – 7.1 in April 1.3% 7-5.3%

34. Fed slaughter has gained steadily on ’15 levels...... Weights are at ‘15 levels – still BIG!!!

35. Higher slaughter & weights = higher output...... We expect Q3 and Q4 to be +3.1 & +3.8%

36. Beef summary and prices...  Beef prod up ~4% in ‘16 – same in ‘17  Ch. cutout is holding near $220 – implies $138 with cash steers at $128 last week -Cutout supported by middle meats -Ribeyes retest March highs, Strip Loins retest spring ’15 highs near $9 -Round and chuck items supported by trim- mings – but well below last year’s levels  May placements expected to be +7-9%, marketings remain brisk – more current

37. HOGS & PORK

38. Higher corn, SBM – Costs up $4+ from April... But still the lowest since 2010

39. ‘17 still looks good in spite of cost increases...... With ‘17 roughly breakeven at present

40. April exports were down but due to April ‘15!...... We are now finished with goofy yr/yr comps.

41. ALL China/HK – up 95% yr/yr, YTD now +136%...... ALL others down in April except Canada (+5%)

42. More of the same – GOOD! – for PEDv...  Data from 1022 sow farms, 25 of 28 large systems reporting, 2.578 mil. sows!  ZERO breaks wk of 5/27, EWMA now BELOW the epidemic threshold  Our outlook still contains NO PEDv ADJUSTMENTS

43. March H&P – The numbers were slightly bullish...

44. We still believe USDA missed the BH low...... Profits, anecdotal evidence of expansion

45. And the state data raise serious questions...

46. USDA’s farrowing intentions are probably good...... But USDA’s yr/yr changes are BAD – revisions

47. A more useful representation of farrowings...

48. We still believe USDA’s Dec-Feb pigs/litter is low... Green line = “normal”; we are splitting for now

49. Higher Canadian imports continue...... Especially for feeder/weaner pigs post-MCOOL

50. Slaughter has been very close to our forecasts...... Tight capacity this fall – much better in ‘17

51. Pork inventories are finally back to normal...

52. How much capacity growth and WHEN?

53. Not much help for ‘16 – but big growth afterward

54. Slaughter forecasts from March report...

55. Price forecasts – It appears exports will carry us!... I added $3-$4 for both Q3 and Q4

56. Cuts: Recent strength has pushed cutout value

57. Risks  Negative: Major export disruption – small prob, HUGE impact  Neg. or Pos.: PEDv/HPAI – not likely now  Positive: If PRRS/PEDv were worse?  Negative: Slower demand growth -Domestic: Prefs? Wages/incomes? -Exports: CHINA/HK, $US  Negative: Packing capacity crunch in Q4?  Negative: Pork prices if plants are full in ‘18?