1. 2008 Market Update: Clinton Dobson Livestock Market Analyst Alberta Agriculture and Rural Development

2. 2 2008 – Along for a WILD Ride Grains and Oilseeds  Prices, Balance Sheets…Costs Livestock  Prices, trade, major events Farm Income Coming around the bend…

3. 3 Canadian Canola 2008/09 seeded acreage up 1%

4. 4 May /08 Canola Futures $13.60/bu VOLATILITY !! eg. up $25 and closes down $30 $55 on 42T = $2,310 Impacts option values and margin calls

5. 5 Canadian Barley 2008/09 seeded acreage up 1%

6. 6 Feed Barley 2-Row Malt 2007/08 PRO - $360/tonne Van Saudi Arabia, increased barley import subsidy by 71%

7. 7 French Malt Barley Prices $ 465/tonne = $10/bu Source: Alberta Grain Commission, March 2008

8. 8 Canadian Wheat 2008/09 seeded acreage up 7%

9. 9 Spring Wheat Nearest Futures

10. 10 World Wheat Ending Stocks Consumption > Production 9 yrs

11. 11 Canada – Stocks to Use Ratio Very low Ending Stocks to Use Ratio

12. 12 Costs…

13. 13 AB Diesel Prices are on the rise $0.86/litre May /07 - $0.72/litre Sept /07 - $0.75/litre

14. 14 Fertilizer prices also move higher $884/tonne $571/tonne $620/tonne Dec 31, 06 vs Dec 31, 07 46-0-0 up 39% 11-51-0 up 42% 82-0-0 up 24%

15. 15 And so do ocean freight rates

16. 16 Renewable Fuels - US Ethanol

17. 17 Grains and Oilseeds Summary Several years of declining carryout. Market tightness, causes major buyers to increase purchases. Increasing demand – biofuels, China Weather problems Volatility – impacts risk management

18. 18 Livestock Feed grains prices and overall value Exchange rate Market access Disease and productivity Capacity utilization Substitutes…pork and chicken Profits, consumer confidence

19. 19 US $ Declines

20. 20 Consumer Confidence is dwindling Feb March

21. 21 AAA Cutout

22. 22 Current meat supply is large 08 vs 07  7%

23. 23 US, Forecasted Year over Year Growth The Circovirus Vaccine Works !!!

24. 24 Feeder Steer Comparison

25. 25 Feeder cattle prices

26. 26 Feeder Steer vs Barley Price

27. 27 Feed Grain Comparison

28. 28 AB/SK Feeder Placements January was very cold July – Dec down 13%

29. 29 Feeder Cattle Exports Corn $ < Barley $ Despite the lower US$ that makes Canadian Cattle more Expensive

30. 30 2007 Fall-run

31. 31 Fed Cattle Exports

32. 32 Alberta Fed Steer Prices

33. 33 Fed Steer Basis

34. 34 Canadian Fed Cattle Slaughter

35. 35 Slaughter Cow Exports Rule 2: Nov 19 th border opens to OTM

36. 36 Canadian Cow Slaughter Impact of the Border Closure Still large slaughter despite open border

37. 37 Alberta – Beef Cow Inventory Down 4.8% since 2005 Canada Down 5.7% since 2005

38. 38 US Beef Herd is declining… Drought in SE US High Feed Grain Prices Aging Producers Last cycle had large herd expansion Quick Peak

39. 39 Heavy losses feeding cattle

40. 40 Low hog prices in Alberta

41. 41 Increased Feeder Pig Exports

42. 42 The same for fed pig exports

43. 43 Western Canada Sow Inventory

44. 44 Slaughter Sow and Boar Exports to US

45. 45 What is happening with our Sows?? YTD down 11% from 2007

46. 46 US Sow Slaughter

47. 47 Year over Year Change in Sow Herd

48. 48 Low prices in Canada, but….Imports

49. 49 Alberta Farm Cash Receipts

50. 50 Summary Exchange Rate Feed Grain Prices and Competitiveness Record Meat Production Over capacity in Beef Slaughter US herd not expanding …in addition the meat market is becoming increasingly complex as consumers search for antibiotic free,organic, animal welfare, traceable, carbon food-print, guaranteed tender, ‘Angus’….

51. 51 Questions

52. 52 Fed Cattle Price Projection

53. 53 Feeder Steer Price Projection

54. 54 Hog Price Projections

55. 55 Feeder Cattle Basis (Cash to Futures)

56. 56 Fed Cattle Basis (Cash to Futures)

57. 57 Pork Exports in 2007

58. 58 Beef Exports in 2007

59. 59 Beef Cutout Comparison

60. 60 Be prepared to switch feed grains

61. 61 “Prediction is very difficult, especially about the future.” Niels Bohr (1885 - 1962) “As a general rule, the most successful people in life are the people who have the best information.” Benjamin Disraeli

62. 62 Nearby is , future months  Lean Hog Futures: February 25 vs March 2, 2008

63. 63 2007 Slaughter Plant Capacity Capacity is running at around 70-75% capacity.

64. 64 After JBS Acquisitions Fall of 2007 – up to $75/head loss in the US.

65. 65 Feeder Placements by Size Jan

66. 66 Meat Consumption

67. 67 Meat Expenditure

68. 68 Coarse Grains 2007-08 World production – 1,052 MMT World trade – 120 MMT Canada