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CATTLEMAN’S CONFERENCE March 2010

CATTLEMAN’S CONFERENCE March 2010. Ferdi Meyer. Overview of Presentation. Feed and beef market fundamentals World market Domestic market Profitability indicators of SA beef sector. World Market – Fuel. World Cereal Price Projections. 5. Source: BFAP projections.

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CATTLEMAN’S CONFERENCE March 2010

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  1. CATTLEMAN’S CONFERENCEMarch 2010 Ferdi Meyer

  2. Overview of Presentation • Feed and beef market fundamentals • World market • Domestic market • Profitability indicators of SA beef sector

  3. World Market – Fuel

  4. World Cereal Price Projections 5 Source: BFAP projections

  5. World Oilseed Price Projections 6 Source: BFAP projections

  6. US Production 0.7% decrease from 2009

  7. …continues to decline World Production

  8. US Consumption 0.3% decrease from 2009

  9. World Production Production decreases: • Argentina (13 percent) • China (4 percent) • United States (2 percent). Production increases (but will not offset decreases): • Brazil (4 percent) • India (5 percent) ………will continue declining, but at a slower rate of less than one percent

  10. Forecasts (decreases): Argentina: • production decrease 13 percent (tighter cattle inventories) • begin 2010 with a herd 10 percent lower than just two years ago • drought, persisting = primary driver of herd reduction • fewer weaned calves, a smaller herd and a reduction of cows for slaughter = limit supplies United States: • production to decline nearly 2 percent • cattle herd has been contracting since 2007

  11. Forecasts (decreases): China: • continuing contraction of the cattle herd • beef production will fall to just over 5.5 million tons • backyard producers discouraged by a marketing system disadvantageous to small producers • despite high cattle prices, production costs have risen at a faster rate, squeezing profit margins • uncertainty - outbreaks of foot and mouth disease (FMD)

  12. Forecasts (increases): Brazil: • production is forecast to rise 4 percent • herd continues to expand and is forecast to reach 185.2 million head by 2010 • increased availability of slaughter cattle will not meet strong demand for exports, which accounts for the bulk of the increase, but also satisfy solid domestic demand

  13. Forecasts (increases): India: • production to rise 5 percent • primarily driven by strong domestic demand • firm demand for exports will also bolster production

  14. US Cattle Prices will improve… NE Direct Fed Steer Dollars per cwt OK City Feeder Steer

  15. US Pork Price Trends Returns

  16. SA OUTLOOK

  17. Real Per Capita GDP Growth

  18. Exchange Rate

  19. SA White Maize Record Harvest

  20. SA Maize Market WMZ Safex YMZ Safex 21

  21. SA Oilseed Market

  22. SA Beef Market Ave Auction Price 24

  23. Meat Consumptions Growth 8% 20% 7% 1%

  24. Chicken as a substitute

  25. Chicken Production 27

  26. SA Calf and Beef Prices Ratio 28

  27. Industry Profitability 29

  28. Real Beef and Maize Prices

  29. BASELINE IN AUGUST 2010

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