巴克莱-美股-农业行业-美国农业：3月Ben的牛肉配额-318-23页.pdf

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巴克莱-美股-农业行业-美国农业：3月Ben的牛肉配额-318-23页.pdf
Equity Research
18 March 2019
CORE
Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with
companies covered in its research reports. As a result, investors should be aware that the
firm may have a conflict of interest that could affect the objectivity of this report. Investors
should consider this report as only a single factor in making their investment decision.
This research report has been prepared in whole or in part by equity research analysts
based outside the US who are not registered/qualified as research analysts with FINRA.
PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 18.
Restricted
- Internal
Americas Agribusiness
BBQ – Ben’s Beef Quotes: March 2019
Due to the US government shutdown and delayed data availability we decided to skip
our February edition of BBQ. Now as data feeds have been updated, we are
presenting our March edition of “BBQ – Ben’s Beef Quotes”. As in the past we
highlight important news, major trends in agri-product pricing, demand and trade
data. We include eggs, poultry, pork, some lamb and veal – it’s not all beef!
News
U.S. lawmakers debate over ‘meat’ substitutes in fear of the threat it poses to the
US$110bn U.S. meat market. Among many bills which have been presented regarding
plant-based products, some without success, the latest bill proposes making it illegal to
label meat alternatives/substitutes as ‘meat’.
Following 25 recalls of millions of pounds of meat and processed foods, the USDA
sets new guidelines for food companies. An increase in recalls of meat and poultry
products drove the U.S. government to increase its regulatory requirements for the
internal investigation processes as well as the way the companies receive and deal with
client complaints around the topic.
Prices & Feed
Our outlook continues to be cautious considering ongoing uncertainty in some
markets. Overall, while some metrics have shown improvements or maintain
healthy growth, others remain under pressure given volatility and uncertainty.
Chicken production still at positive growth rates, while turkey and red meat
production had a weaker performance. Flattish slaughter rates and lower numbers
of turkey eggs in incubators drove red meat and turkey productions contractions.
Trade & USDA
U.S. – E.U. trade negotiations focus on agricultural issues. Key topics include UK
markets’ bans of products including GMOs, hormone-boosted beef, and chlorine-
cleaned chickens, among others. We expect to see an extensive agenda ahead.
USDA takes action on food safety concern. Chicken and beef standards must
improve in order to help the domestic market as well as to expand to other markets.
Meat availability expected to further expand. USDA estimates for 2019 poultry and
red meat per capita availability at 220.5mn lbs. (vs. 218.8mn lbs. in 2018).
Our Stocks
Staying OW on TSN (Top Pick), PPC, JBS & BRFS; EW on HRL & SAFM and UW on MRFG.
INDUSTRY UPDATE
Americas Agribusiness
NEUTRAL
Unchanged
Americas Agribusiness
Benjamin M. Theurer
+52 55 5241 3322
benjamin.theurer@barclays.com
BBMX, Mexico
Antonio Hernandez
+ 52 55 5241 3323
antonio.hernandez@barclays.com
BBMX, Mexico
Barclays | Americas Agribusiness
18 March 2019 2
CONTENTS
AMERICAS AGRIBUSINESS .............................................................................. 3
News................................................................................................................................................................... 3
Commodity trends ......................................................................................................................................... 4
Price performance .......................................................................................................................................... 5
EGGS AND POULTRY ........................................................................................ 6
Production & Capacity .................................................................................................................................. 6
Pricing ................................................................................................................................................................ 7
Feed-Price Ratios ......................................................................................................................................... 10
Trade ............................................................................................................................................................... 11
RED MEAT ......................................................................................................... 12
Production & Capacity ............................................................................................................................... 12
Pricing ............................................................................................................................................................. 14
Feed-Price Ratios ......................................................................................................................................... 16
Trade ............................................................................................................................................................... 17
All prices are in U.S. dollars unless otherwise noted.
PROTEIN CATEGORY HIGHLIGHTS
Poultry
Chicken production generally maintained positive growth rates, while data for turkey
was mixed. Egg production in January grew +4.7% y/y while egg-type chicks hatchings
expanded 3.8% y/y. Weekly eggs-set at the start of March were up 2.5% y/y and chick
placements grew 1.4% y/y (Figures 6-9). As for turkey, eggs in incubators for the month of
March contracted 2.3% y/y and despite a lower number of placements during February,
hatchings managed to post a positive 1.0% y/y growth. In terms of pricing, performance
remained mixed for poultry products, yet mostly flattish on a y/y basis (Figures 14-17). The
feed-price ratios for December (broilers, turkey and eggs) performed mixed compared to
previous months yet were all fairly stable. In terms of trade during December, pressure on
growth of exports remains evident as both value and volumes dropped on a y/y basis.
Red Meat
Commercial production of red meat decreased in December, as slaughter rates for both
beef and pork were flat. Beef production fell 1.5% y/y in December, while pork production
dropped 0.1% y/y on the back of flatting slaughter growth. During February, inventory
levels for cattle on feed grew only 0.4% y/y, while figures reported for January cattle
placements were down 5.3% y/y (Figures 36-38). Wholesale prices for beef were flattish
during February while for pork price dropped significantly, -19.1% y/y (Figures 40-45) and
retail prices were overall flattish for pork and mixed for beef. Feed ratios came down for
both steers and heifers as well as for hogs on a q/q and y/y basis. As for trade, growth
remained pressured in December for exports with a minor increase in imports.
Barclays | Americas Agribusiness
18 March 2019 3
AMERICAS AGRIBUSINESS
News
U.S. lawmakers debate over meat substitutes in fear of the threat it poses to the
US$110bn U.S. meat market. Among many bills which have been presented around the
topic, some without success, the latest bill proposes making it illegal to label meat
alternatives/substitutes as ‘meat’. This movement has about half-a-million meat-industry
workers and more than 20 meat-producing states fearful of the impact this could cause,
especially considering the ~19% sales drop in cow milk in the past few years since non-dairy
milks such as almond, soy and coconut milks became a popular alternative beverage,
attributed to these being labeled as milk. As investigation progresses regarding plant-based
and lab-grown meat alternatives as a response to the dire issues surrounding global
warming, health issues, animal cruelty, among others, the battle between meat lovers and
animal lovers (or simply more conscientious individuals) grows. As a key driver of climate
change, taking up about 15% of greenhouse gas emissions, animal farming has many
people, including scientists, vegans and environmentalists working towards greener
alternatives. Though lab-grown meat is not yet being sold, it is well into its research and
development stage to shortly follow the plant-based foods already available in the market
and forecast to double to US$2.5bn by 2023 according to Euromonitor International. While
the jury is still out on whether the labeling meat-substitute products as meat should be
prohibited or not, we believe it is likely that the clean ‘meat’ market will continue to grow as
does the threat from our, presumably unsustainable, traditional animal meat option.
(Source: Reuters, “U.S. lawmakers tuck into juicy debate over meat substitutes” March 14,
2019)
Following 25 recalls of millions of pounds of meat and processed foods, the USDA sets
new guidelines for food companies. An increase in recalls of meat and poultry products
drove the U.S. government to increase its regulatory requirements for the internal
investigation processes as well as the way the companies receive and deal with client
complaints. Companies including Tyson Foods Inc., Smithfield Foods Inc., Perdue Foods,
and Pilgrim’s Pride Corp., among others, have had to face recalls due to contaminated
products possibly containing metal, plastic, wood or other foreign materials, which many
people blame on the increase in automation in the food processing production lines. As
food companies continue to work towards improving processes and quality, the new
guideline from the U.S. government states companies must alert the USDA within 24 hours
of receiving a customer complaint if it’s possible that contaminated products are in the
marketplace.
(Source: Reuters, “Exclusive: U.S. to issue meat company guidelines as recalls mount -
official” March 4, 2019)
Half-a-million meat-industry
workers and more than 20
meat-producing states
threatened by meat alternative
products being labeled ‘meat’.
Concern on food-safety
following many recalls of meat
and poultry products has the
USDA advising new guidelines
to food processing companies.
Barclays | Americas Agribusiness
18 March 2019 4
Commodity trends
During February, daily corn and soybean prices grew on average 2.2% and -9.8%,
respectively. Performance at the last day of the month had lower performance than last
year, down 3.3% for corn and down 14.1% y/y for soybean, while for the month (start to
finish) the contraction was -3.9% and -1.9%, respectively. By mid-March corn was at
~US$362 while soybean was at ~US$890 cents per bushel (Figures 1 - 4) and price
performance was also down YTD at -3.8% and -0.6%, respectively.
FIGURE 1
CBOT corn prices ended February down 3.3% y/y
FIGURE 2
Actual corn prices through February 2018 and Forward
Curve
Source: Refinitiv, Barclays Research.
Source: Refinitiv, Barclays Research
FIGURE 3
Soybean prices ended February down 14.1% y/y
FIGURE 4
Actual soybean prices through February 2018 and forward
curve
Source: Refinitiv, Barclays Research.
Source: Refinitiv, Barclays Research
-10.0%
-5.0%
0.0%
5.0%
10.0%
330
340
350
360
370
380
390
US$c/bsh
% YoY Growth, right
For the month: -3.9%
220
260
300
340
380
420
460
Actual
Future
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
840
860
880
900
920
940
US$c/bsh
% YoY Growth, right
For the month: -1.9%
600
800
1,000
1,200
1,400
Actual
Future
Barclays | Americas Agribusiness
18 March 2019 5
Price performance
During February, our covered meat companies remained generally below the S&P 500
and the IBOV, with some outliers as shown in Figure 5. By mid-March, performance for our
covered companies on a YTD basis was generally positive highlighting the following: TSN
(+22%), SAFM (+25%), PPC (+10%), and JBS (+41%) while in the case of BRF (-11%), MRFG
(-9%) and HRL (-2%) growth was negative compared to the S&P 500 (+2%) and IBOV
(+12%).
FIGURE 5
Americas Agribusiness price performance vs. S&P 500
Source: Refinitiv, Barclays Research
0
20
40
60
80
100
120
140
160
TSN
HRL
SAFM
BRFS
PPC
JBS
MRFG
S&P 500
IBOV

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