U.S. Beef TradeBrett Stuart

Economic Turmoil / Credit Crisis• Meat export deliveries lag transactions by weeks

exaggerating credit freeze impact• Global shipping falls to a standstill (container rates

from Asia EU hit ZERO in January 09; Baltic Dry Index down 96%)

• Rapid dollar appreciation shifts global pricing• Economic uncertainty globally drives consumer

belt-tightening• Consumer demand varies by country, but

remember: U.S. beef is the discount beef in key markets (Japan, S.Korea)

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Daily

Key Global Financial IndicesPercentage Change from Jan 1, 2008

DJIA, -34%SYDI, -40%Nikkei, -41%DAX, -42%Bovespa, -45%Hang Seng -49%BOM, -57%Shanghai, -65%

Source: Pacific Exchange Rate Service

GLOBAL SUPPLY / DEMAND

GlobalizationThe flow of capital and equity in the meat/livestock

industries is increasing

• JBS (22 countries)

• COFCO (China) buying 7 million shares from Smithfield Tyson formed 3rd joint venture in China (poultry)

• Marfrig (Brazil) rapidly expanding overseas investment (Pemmican jerky line - ConAgra, OSI in Europe/BRZ)

• Sadia (Brazil) poultry in Russia and UAE

• Goldman Sachs: 60% of Shanghui group, 13% of Yurun Food Group, 10 hog farms ~ $300 million (all China

• Deutsche Bank: 30% of unnamed Chinese hog farm, other J.V.’s in China

Global Meat Forecasts

Source: FAO/OECD Forecasts

Added 2008-2017:Beef: 11 mmtPork: 21 mmtPoultry: 18 mmt

Global Beef Trends

Source: USDA/FAS, CattleFax Projections

2009 F

76% of US beef exports go to

Mexico, Canada, Japan, and S.

Korea

Global Beef Trends: ‘09 Steady/Lower

Source: USDA/FAS, CattleFax Projections

U.S. TRADE

Source: USDA, CattleFax Projections

U.S. Meat Exports in 2009

U.S. Beef Trade and Forecasts

Exports

Source: U.S. Dept of Commerce, forecasts by CF

Bottom Line: Future of U.S. Beef Exports

• Global demand will outpace supplies • However, ACCESS is a much bigger factor

o Japan, China, EU, Mexicoo Russia, Mexico

• Exports of competing species critical to net meat supply equation

• Disease issues are alive and well (PRRS, AI, FMD)

Key Considerations for 2009• Exports to NAFTA (Canada/Mexico) are critical, worth

$50-60 per head• Trade friction with Mexico is HIGH• 12 months of access to S. Korean market~ 468 mil lbs

Another Key Factor: 2009• Expanded Japan access would be significant to

U.S. cattle industry (~ $3-4/cwt live)o Currently at 24% of pre-BSE levels (19 mil lbs/week)o $373 million in 2008 vs $1.4 billion in 2003o Japan has previously offered access < 30 moao <30 moa would restore 95%+ of pre-BSE volumes

$143/lb