Livestock Market Trends

Livestock Market Trends Farm$mart Agricultural Conference January 18, 2014 John Bancroft Market Strategies Program Lead john.bancroft@ontario.ca 519-271-6974

Today s Discussion 2014 FCC Market Drivers (5) Other Items to Watch Cattle & Hog Price Market Trends Manage the Margin$

FCC Top Five Economic Drivers for 2014 Farmland market slowing down Crop prices retreating, may be less aggressive (Source: www.fcc-fac.ca ) Past rates above rate of inflation and productivity gains Factors to consider are crop supply and value and long term interest rates Trade Comprehensive Economic Trade Agreement (CETA) Trans-Pacific Partnership (TPP) U.S. Country of Origin Labeling (COOL) Free Trade talks with South Korea

Expectation that 43% will be exported Value Up 8% 71% U.S. Source: Beef Supply at a Glance, January 4, 2014

79% beef imports from the U.S. Source: Beef Supply at a Glance, December 28, 2013

Canada Pork Exports & Imports 31% to U.S. Export Value down 1.6 % Imports down 1.5 % with 93% from U.S. Source: Hog Statistics at a Glance, January 4, 2014

21% of Production Exported 6,000 U.S. Pork Exports (millions of lbs) USDA Forecasts Jan 2014 5,000 4,000 3,000 2,000 1,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Data Source: Monthly U.S. Livestock and Meat Trade Data, http://www.ers.usda.gov/data/meattrade/

FCC Top Five Economic Drivers for 2014 U.S. Economy Improves (Source: www.fcc-fac.ca ) Remains divisive Consumer debt declining since 2008 Labour market showing some signs of improvement U.S. Dollar showing some strengthening Agricultural Equipment Sales Retreat 2006 to 2012 2,100 tractors/month 2001 to 2005 1,540 tractors/month Lower crop returns and Value of Canadian Dollar

FCC Top Five Economic Drivers for 2014 Strength in Red Meat Expectation of healthy returns over the next 2 years Declining versus Stabilized versus Growth (Source: www.fcc-fac.ca ) Canadian red meat consumption stabilizing and growing meat demand in emerging markets Demand for Meat Consumer Tastes & Preferences Consumer Disposable Income Prices of Competing Meats General Economic Conditions (Domestic & Foreign)

Other Items to Watch in 2014 2014 Crop 2013 crop size reduced the cost pressure Increased world crop production over time Weather Demand - Comfortable versus tight ending stocks

Moving from Tight Supply to Surplus $325 Avg. Huron Corn FOB Farm & Western Ontario Feed Corn ($/tonne) Actual Data Estimated $300 $275 $250 $225 $200 $175 $150 $125 2007 2008 2009 2010 2011 2012 2013 2014 Data Source: Actual Data from Daily Ontario Commodity Report and Estimated Data based on basis adjusted closing futures *

Supply - Basis Corn Average Monthly Value ($/tonne) Average of Huron FOB Farm & Western Ontario Feed Corn Actual Estimated $280 $270 $260 $250 $240 $230 $220 $210 $200 $190 $180 $170 $160 $150 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 2014

Supply - Basis $6.00 Corn -Weekly Average Huron FOB Farm ($/bu) Old Crop Corn (2013-2014) New Crop Corn (2014-2015) $5.75 $5.50 $5.25 $5.00 $4.75 $4.50 $4.25 $4.00 $3.75 $3.50 40 1 26 1 26 39 O N D J F M A M J J A S O N D J F M A M J J A S Pre Plant Growing Season Harvest Storage Phase Data Source: Daily Ontario Commodity Report

Tight Supply Exports South America $700 Soybean Meal Weekly Avg. Prices (C$/tonne, Hamilton + $20) $650 $600 $550 $500 $450 $400 $350 $300 $250 - - 2007 2008 2009 2010 2011 2012 2013 2014

2014 2015? $640 Soybean Meal Values ($/tonne) Hamilton + $20/tonne Actual Estimated $620 $600 $580 $560 $540 $520 $500 $480 $460 $440 $420 $400 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 2014

Impact on Feed Costs Grow-Finish Feed Cost ($/pig) $115 $110 $105 $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50 $45 $40 Actual Estimated - - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Based on Feed Costs used in Hog Finishing Margin Tracker

Other Items to Watch in 2014 Meat Demand U.S. pork consumption outpacing the sales of all meat products Spending more $ on meat even with per capita income remaining level Modest population growth and export growth Food safety and farm practice issues tend to impact the demand of middle income countries Data Source: Daily Livestock Report, January 16, 2014

Pork @$3.81 in Oct. Beef @ $5.41 in Nov. U.S. Pork and Beef Retail Average Yearly Price (US$/pound) Pork Beef $6.00 $5.00 $4.81 $4.99 $5.29 $4.33 $4.26 $4.38 $4.00 $3.00 $2.94 $2.92 $3.11 $3.43 $3.47 $3.64 $2.00 $1.00 $0.00 2008 2009 2010 2011 2012 2013 Data Source: : http://www.ers.usda.gov/briefing/foodpricespreads/meatpricespreads

Other Items to Watch in 2014 Codes of Practice for the Care and Handling of Beef Cattle and Pigs in Canada National Farm Animal Care Council's Pig Code Development Committee finalized its updated Code of Practice for the Care and Handling of Pigs in Canada The document has now been submitted for editing Once the updated code has been edited and the final version approved by the committee it will need to be translated at which point it will be ready for public release. Committee expects it will be released by late winter or early spring Code of Practice for the Care and Handling of Beef Cattle has been posted http://www.ontariobeef.com/uploads/userfiles/files/beef_code_of_practice.pdf

Other Items to Watch in 2014 Canadian Dollar Source: London Free Press, Jan. 11, 2014

Long Term Trend of Canadian Dollar Weekly Average Value of the Canadian Dollar ($US) $1.10 $1.05 $1.00 $0.95 $0.90 $0.85 $0.80 $0.75 $0.70 $0.65 Noon Hour Bank of Canada Rate CME Canadian Dollar Futures $0.60 * 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Impact on Crop Basis $1.0000 $0.7500 $0.5000 $0.2500 $0.0000 -$0.2500 -$0.5000 -$0.7500 -$1.0000 -$1.2500 -$1.5000 Weekly Average Soybean Basis Basis Adjusted Basis Canadian Dollar 1 13 26 39 1 26 34 O N D J F M A M J J A S O N D J F M A M J J A Growing Season Harvest Storage Phase Adjusted Basis = Local Soybean Price Exchange Rate - Soybean Futures $1.04 $1.02 $1.00 $0.98 $0.96 $0.94 $0.92 $0.90 $0.88 $0.86

Other Items to Watch in 2014 Source: http://beefmagazine.com/cow-calf/industry-glance-us-cowherd-liquidation Feb. 7, 2013

Stabilized? 6,000 Canada - Beef Cow Herd ('000 of Head) - January 1 Jan 1st July 1st 5,500 5,000 4,500 4,000 3,500 3,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: Statistics Canada

Dramatic Reduction Stabilized? Trends in the Ontario Beef Cow Herd (1,000 of Head) - Jul. 1 Inventory on July 1, 2013-276,300 cows 500 475 450 425 + 30% - 20% + 7% 400 375 350-30% 325 300 275 250 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: Statistics Canada - Cattle Statistics, 23-012-X

Slight Decline? 260 240 220 200 180 160 140 120 100 80 60 40 Ontario - Beef Heifers - July 1 ('000 of Head) Replacement Slaughter 20 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: Statistics Canada

Level to Down 1,250 Trends in the Ontario Cattle on Feed (1,000 of Head) - July 1 Cattle on Feed = Heifers for Slaughter + Steers (+ 1 yr) + Calves (< 1 yr) 1,200 1,150 1,100 1,050 1,000 950 900 850 800 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: Statistics Canada - Cattle Statistics, 23-012-X

Will Cow Slaughter Slow? With little information available since the January 1, 2013 Cattle report, the state of replacement heifer retention is largely unknown ahead of the January 1, 2014 estimates. Heifers have constituted relatively large shares of feedlot placements and inventories in 2013. These high heifer proportions of cattle on feed, combined with the relatively large cow slaughter, will likely result in another year-over-year decline in total cow inventories on January 1, 2014. Source: December 2013, USDA Livestock, Dairy, and Poultry Outlook

Will Cow Slaughter Slow? Some heifers that had been placed on feed and destined for slaughter could be returned to the country as replacement heifers under the right conditions. As mentioned last month, the anticipated inventory dynamics would push any significant increases in beef production well into the future, likely into 2017 or beyond. Of course, weather especially drought-related could alter any projections. Source: December 2013, USDA Livestock, Dairy, and Poultry Outlook

U.S. Beef Production & Exports - 2014 USDA Beef Production projection for 2014 is down 5.25 % Current USDA Forecast for 2014 Beef & Veal Trade Exports down 8% ; Imports Up 1.4%

Relatively level Surprises in Dec. # s U.S. Quarterly Sow Inventory (1,000 of Head) 7,200 7,000 6,800 6,918,000 6,233,000 6,600-14% 5,757,000 6,400 6,200 6,000 5,963,000 + 4.5% - 6.8% 5,800 5,600 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: USDA Hogs & Pigs Reports

Level 1,650 1,600 1,550 1,500 1,450 1,400 1,350 1,300 1,250 1,200 1,150 1,100 1,050 Canada - Sow Inventory ('000 of Head) 1,000 J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: Hog Statistics, Statistics Canada

Level 440 430 420 410 400 390 380 370 360 350 340 330 320 310 300 290 Ontario Sow Inventory ('000 of Head) 280 J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju J Ju 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: Hog Statistics, Statistics Canada

Productivity Ontario - Yearly Average Pigs Born per Sow Farrowed 12.00 11.80 11.60 11.40 11.20 11.00 10.80 10.60 10.40 10.20 10.00 9.80 9.60 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Data Source: Hog Statistics, Statistics Canada

Up 4 th Quarter up 5.7 pounds 214 212 U.S. Barrow & Gilt Weekly Average Dressed Weight - (lbs.) 2013 2014 2012 210 208 206 204 202 200 198 196 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Data Source: http://www.ams.usda.gov/mncs/mn_reports/sj_ls711.txt

4 th Quarter up 1.71 kilograms 99.2 100 Ontario Average Yearly Dressed Weight (kg) 98 96 96.3 96.9 97.9 94 92 90 88 86 85.6 86.5 87.6 88.4 89.2 89.6 90.1 90.2 91.0 91.7 92.4 92.7 92.9 93.7 84 83.4 84.0 84.1 82 80 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Data Source: Ontario Pork Sales Data

Wild Card - PED Porcine Epidemic Diarrhea December USDA Hogs and Pigs Report Impact is showing up in pigs weaned/litter, inventories, and hog marketings 1 st half of 2014 down- even-up?

Market Price Trends I wish you d wear a hat in there. I ve been looking all over for you!

Calves $/cwt. $195 Ontario Weekly Avg. Prices - Large & Medium Frame Steers (500-599 lbs.) 2013 2014 3 Yr Avg ('11 to '13) $185 $175 $165 $155 $145 $135 $125 $115 $105 $95 1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940414243444546474849505152 Data Source: OCA Market Information

Feeders $/cwt. $170 Ontario Weekly Avg. Prices - Large & Medium Frame Steers (800-899 lbs.) 2013 2014 3 Yr Avg ('11 to '13) $160 $150 $140 $130 $120 $110 $100 $90 $80 1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940414243444546474849505152 Data Source: OCA Market Information

Market $/cwt. $140 Ontario Weekly Avg. Prices - Large & Medium Frame Steers (1250+lbs.) 2013 2014 3 Year Avg. ('11 to '13) $135 $130 $125 $120 $115 $110 $105 $100 $95 $90 1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940414243444546474849505152 Data Source: OCA Market Information

Long Term Cattle Price Picture $150 Ontario Weekly Avg. Prices - Large & Medium Frame Steers (1250+lbs.) $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 * - * 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Data Source: OCA Market Information

Up U.S. Early Weaned Pig - Cash Values (US$/pig) $95 $90 $85 $80 $75 $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 2013 2014 3 Year Avg. ('10 to '12) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Data Source: National Direct Delivered Feeder Pig Report - NW_LS255

Up U.S. 40 Pound Feeder Pig - Cash Base Values (US$/pig) $100 2013 2014 3 Year Avg. ('10 to '12) $90 $80 $70 $60 $50 $40 $30 $20 $10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Data Source: National Direct Delivered Feeder Pig Report - NW_LS255

Long Term US Hog Prices $110 $105 $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50 $45 $40 * Weekly Ontario U.S. Reference Price (U.S.$/cwt.) (U.S. CME Constructed Price) * 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2014 US Hog Prices A Snapshot of 2014 U.S. Reference Hog Prices (US$/cwt) $110 2014 Actual Prices Estimated Prices 2014 3 Year Avg ('11 to '13) $105 $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50 1 13 26 39 52 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Long Term Ontario Hog Prices $200 $190 Ontario 100% Formula Base Yearly Average Prices ($/ckg, 100 index) $189.38 $187.03 $180 $170 $160 $150 $140 $130 $120 $146.01 $151.59 $121.42 $124.19 $174.62 $163.22 $136.55 $137.02 $167.73 $149.56 $131.99 $125.38 $125.79 $117.16 $139.88 $161.29 $154.64 $167.16 $110 $100 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2014 Ontario Weekly 100% Base Formula Price ($/ckg, 100 index) $200 2013 2014 3 Year Average ('10 to '12) $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 * * Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Base Formula Price =(U.S. Reference Price - $0.56) x 0.74 x 2.2046 CME Canadian Dollar Closing Value 0.80 1.1195

2014 A Snapshot of 2014 Ontario Hog Prices (C$/ckg, 100 index) $220 2014 Actual Prices Estimated Prices 2014 3 Year Avg. Prices ('11 to '13) $210 $200 $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 1 13 26 39 52 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Long Term Ontario Hog Prices $220 $210 $200 $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 $90 $80 * Weekly Ontario Hog Price (C$/ckg, 100 index) (CME Constructed Price - $0.56) x 0.74 x 2.2026 x Exchange Rate 0.80 1.1195) * 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Market Decision$ Challenge Use market information and intelligence to make informed decisions to achieve your goals! Which is greater the factors that could cause the markets to fall or the factors that could make the markets rise over the next few months Beware of market seasonality What is the potential impact on your risks? i.e. price, margin, cash flow, and financial risks

Managing Your Margin$ Key Performance Indicator (KPI)

Managing Your Margin$ Margin is the revenue left after pig and feed costs or after cattle and feed Quick indicator of return after accounting for the variables with the greatest risk Monitor hog/cattle and feed markets for current and future sales (forward looking) What is a reasonable margin for your farm Focus on the margin versus the price and cost (trying to take control of some of the marketing emotion)

Cost of Production Item Weight (lbs) $/cwt. $/Head $/cwt. Market Steer 1,450 $133 $1,929 $133 Yearling steer 850 $154 $1,307 $90 Feed Tonnes $/tonne Corn Silage 1.21 $40 $49 Corn 1.79 $171 $307 Supplement 0.13 $407 $53 Total Feed Cost $408 $28 Yardage (health, interest, marketing, etc.) $153 $11 Total Costs $1,869 $129 Net Return $59 $4 Data Source: Ontario Beef Producers Weekly Breakeven for Yearly Steers

Cattle Margin Tracker$ Cattle Finishing Margin Trend ($/cwt.) $30 Marketed On Feed Estimated $25 $20 $15 $10 $5 $0 -$5 -$10 -$15 -$20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 2014 Margin ($/cwt.) = (Market Steer Value - Yearling Steer Value - Feed Cost of Gain Value) 14.50 cwt.

The Ingredient$ 2013 & 2014 Ontario Fed Cattle Prices ($/cwt) Feeder Cattle Price Trend - 800 to 900 Pound ($/cwt.) Actual 1250+ Steer Price Estimated Prices 5 Year Average Prices Actual Prices Estimated Prices 3 Year Average $145 $140 $180 $175 $170 $135 $165 $130 $125 $160 $155 $150 $120 $115 $145 $140 $135 $110 $105 $100 $130 $125 $120 $115 $95 $90 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $110 $105 $100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 2014 2013 2014 $280 $270 $260 $250 $240 $230 Corn Average Monthly Value ($/tonne) Average of Huron FOB Farm & Western Ontario Feed Corn Actual Estimated $60 $58 $56 $54 $52 $50 $48 Corn Silage Calculated Monthly Value ($/tonne) Corn Value Divided by 8.5 Based on Actual Corn Values Based on Estimated Corn Values $220 $46 $210 $200 $190 $180 $170 $160 $44 $42 $40 $38 $36 $34 $32 $150 Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec 2013 2014 $30 Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec 2013 2014

2 0 1 3 2 0 1 4 $/cwt. Fed Cattle Margin Calculator Thank You! Feed Inputs Production Market Yearling Feed Margin Stage Corn ($/bu) Silage ($/tonne) Jan $117 $139 $113 -$11 $6.75 $57 Feb $118 $130 $120 -$8 $6.79 $58 Mar $117 $140 $115 -$13 $6.90 $59 Apr $114 $134 $108 -$9 $6.13 $52 May $121 $128 $105 $2 $6.34 $54 Jun $125 $134 $103 $3 Marketed $6.54 $56 Jul $124 $134 $97 $5 $6.33 $54 Aug $124 $126 $95 $11 $5.93 $50 Sep $119 $130 $93 $5 $5.53 $47 Oct $120 $124 $90 $10 $4.49 $38 Nov $123 $127 $86 $13 $4.13 $35 Dec $121 $132 $80 $11 $4.26 $36 Jan $138 $137 $75 $27 $4.30 $37 Feb $140 $144 $71 $26 $4.38 $37 Mar $138 $147 $68 $23 $4.44 $38 Apr $130 $154 $67 $12 On-Feed $4.48 $38 May $138 $149 $67 $22 $4.53 $38 Jun $136 $156 $68 $16 $4.58 $39 Jul $133 $153 $69 $15 $4.63 $39 Aug $134 $160 $70 $12 $4.69 $40 Sep $129 $163 $70 $4 $4.74 $40 Looking Oct $129 $164 $71 $4 Forward $4.52 $38 Nov $129 $162 $71 $5 $4.52 $38 Dec $130 $162 $71 $6 $4.62 $39

Cattle Margin Thank Tracker$ You! 2 0 1 4 $/cwt. Fed Cattle Margin Calculator Production Feed Inputs Market Yearling Feed Margin Stage Corn ($/bu) Silage ($/tonne) Jan $138 $137 $75 $27 $4.30 $37 Feb $140 $144 $71 $26 $4.38 $37 Mar $138 $147 $68 $23 $4.44 $38 Apr $130 $154 $67 $12 On-Feed $4.48 $38 May $138 $149 $67 $22 $4.53 $38 Jun $136 $156 $68 $16 $4.58 $39 Jul $133 $153 $69 $15 $4.63 $39 Aug $134 $160 $70 $12 $4.69 $40 Sep $129 $163 $70 $4 $4.74 $40 Looking Oct $129 $164 $71 $4 Forward $4.52 $38 Nov $129 $162 $71 $5 $4.52 $38 Dec $130 $162 $71 $6 $4.62 $39

Farrow to Finish Margin Tracker$ 2014 Farrow to Finish Return over Feed ($/market pig) $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Marketed Grow Finish Nursery On Sow Gestation Open Sows 1 13 26 43 52 Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec Return over Feed Margin = Market Hog Income - Feed Cost (Farrow to Finish)

Hog Finishing Margin Tracker$ $50 2014 Hog Finishing (C$ per Market Pig) Margin = Market Hog Value - Feeder Pig Value - Feed Cost Actual Pigs on Feed with Est. Feed & Market Pig Values Est. Feeder Pig, Feed & Market Pig Value $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec Actual Pigs on Feed Looking Forward

The Ingredient$ Ontario Market Hog Price ($/ckg, 100 index) Feeder Pig Formula Value (C$/pig) Actual Estimated Actual Estimated $210 $110 $200 $100 $190 $90 $180 $80 $170 $70 $160 $150 $140 $130 $120 $110 $100 Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec 2013 2014 $60 $50 $40 $30 $20 $10 $0 Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec 2013 2014 Feeder Pig Value = 70% of (Market Hog Value 15 weeks out - Current Week's Feed Cost) $280 $270 $260 $250 $240 $230 $220 $210 $200 $190 Corn Average Monthly Value ($/tonne) Average of Huron FOB Farm & Western Ontario Feed Corn Actual Estimated $640 $620 $600 $580 $560 $540 $520 $500 $480 Soybean Meal Values ($/tonne) Hamilton + $20/tonne Actual Estimated $180 $460 $170 $440 $160 $420 $150 Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec 2013 2014 $400 Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec 2013 2014

Managing Your Margin$ Provides an insight relative to assumptions Feeder pig formula does not account for market supply and demand dynamics Remember futures are a moving target and assumed basis will vary from current basis Remember why you made the decision managing your risk (price, cost, production, cash flow, financial, margin, etc.)

Thank You! Access OMAF and MRA Website www.ontario.ca/omafra Agricultural Information Contact Centre Tel: 1-877-424-1300 Email: ag.info.omafra@ontario.ca Agricultural Business Management Website www.ontario.ca/agbusiness Livestock Website www.ontario.ca/livestock