presented by: John Barone The Spring Purchasing Conference JW Marriott, Desert Springs, CA March 22, 2017

Transcription

1 Outlook 2017 presented by: John Barone The Spring Purchasing Conference JW Marriott, Desert Springs, CA March 22, 2017

2 announcements bar opens at 4:00 3:30 3:00 2:30pm prize give-away at luncheon today $500 full passport book drawing (8) 20 Maui Jim certificates last night partnership with NRA SCM group partnership with The Chain Gang

3 2017 supply chain events May 4, The Chain Gang, Long Beach, CA May 18-19, NRA-SCM Spring Conf, Chicago, IL Aug 10, The Chain Gang, Long Beach, CA Sept 14, The Chain Gang, Long Beach, CA Oct 17-18, NRA-SCM Fall Conf, Orlando, FL Oct 18-20, MV Fall Conference, Orlando, FL

4 National Restaurant Association s Supply Chain Management ESG Spring Conference When: May 18-19, 2017 Where: Swissotel, Chicago Registration link: Agenda features: industry issues and regulatory update, indirect sourcing, purchasing options for chains, crisis management, global economic insights, third-party delivery, LTO management and more! 4

5 background education & experience commodity research & forecasting author 2 commodity publications host 2 purchasing conferences for 2017: 4 chain gang meetings

6 diesel & gasoline prices Source: Energy Information Administration, Market Vision, Inc. 6

7 U.S. household net worth recovers in billions of dollars Record high $92.8 trillion in Q Main Drivers: stock market real estate Source: FRED - Federal Reserve Economic Data, 10 years through Q4 2015) 7

8 Source: U.S. Census Bureau, Market Vision, Inc.

9 in thousands Source: Bureau of Labor Statistics, non-farm payrolls, 2017 data through February 9

10 wage & price inflation Source: U.S. Department of Labor, U.S. Department of Connerce 10

11 Wall Street Journal Survey of Economists: March 2017

12 restaurant performance index values > 100 = expansion; < 100 = contraction 2015 levels were the highest since 2004 recession The RPI was 99.6 in August Source: National Restaurant Association 12

13 restaurant same store sales, traffic year-over-year monthly survey results Source: MillerPulse Survey March 16, Nation s Restaurant News 13

14 outstanding student debt: $1.4T Source: FRED - Federal Reserve Economic Data 14

15 Trump Initiatives save / bring back American jobs cross border adjustment (tariff) vat type, consumption base tax infrastructure spending immigration policy

16 federal reserve meddling percent In response to the tech market meltdown & the events of 9/11/01, the Fed drops interest rates from 6.5 to 1.0% ( ) Fed raises interest rates by 4.25% ( ) to contain excessive speculation in real estate recession In response to the financial crisis, the Fed lowers the federal funds rate to zero To keep inflation near its stated 2% target, the Fed has again begun to raise interest rates Source: FRED - Federal Reserve Economic Data 16

17 Federal Reserve Assets $4.45T Fed must eventually unwind this portfolio Source: FRED (Federal Reserve Economic Data) Federal Reserve Bank of St. Louis 17

18 automated job destruction productivity & job growth have diverged since 2000 Source: The U.S. Labor Department, The Wall Street Journal 18

19 artificial intelligence It s about to change everything we do Source: Spiceworks, Inc. survey of 566 worldwide IT professionals, Wall Street Journal 19

20 chef of the future.but can it core a apple? 20

21 domestically outsourced contractors are replacing full time employees Source: Lawrence Katz (Harvard) & Alan Kruegger (Princeton) 21

22 dropping the rate & taxing the gap tax policy would heavy favor exporters Source: U.S. Labor Department, U.S. Census Bureau, Wall Street Journal 22

23 NAFTA - picking the wrong fight % change in manufacturing employment U.S. trade deficit Source: U.S. Labor Department, U.S. Census Bureau, Wall Street Journal 23

24 China s impact on U.S. jobs Source: Wall St Journal 24

25 RIP TPP Trump kills the trans pacific partnership Source: Wall St Journal 25

26 unauthorized labor undocumented workers & their industries Undoc worker facts: - 70% of field workers - 30% are homeowners - 3% are felons - 65,000 deported M case backlog - 416,500 expired visas - 10% of CA workforce Source: Pew Research Center estimates for , Wall Street Journal 26

27 impact of an aging population Source: U.S. Administration on Aging, U.S. Labor Dept, Federal Reserve Economic Data, Wall St Journal 27

28 immigrants & demographics somebody has pay for retiring boomers Source: National Academy of Sciences, Pew Research, Wall St Journal 28

29 nationalist sentiment globalization s toll on developed countries Source: Pew Research Center poll April-May 2016, Wall Street Journal 29

30 U.S. government debt squeeze entitlements will dominate future spending Source: Congressional Budget Office, White House Office of Management & Budget, Wall St Journal 30

31 WTI crude oil futures $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 - near futures - forward contracts gasoline 2014: $ : $ : $ : $ : $2.44 diesel 2014: $ : $ : $ : $ : $2.83 crude futures 2014: $ : $ : $ : $ : $50.21 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 NYMEX Crude Oil (WTI) front month futures contract price per barrel, EIA Short Term Energy Outlook March 2017 fuel prices per gallon 31

32 world liquid fuels outlook accounting for a reduction in OPEC output Supply deficit - high prices Supply surplus - low prices Supply balance if OPEC cuts are for real Source: Energy Information Administration (EIA) Short-Tern Energy Outlook, March

33 China & India have slowed imports strategic reserves are full after stockpiling Source: BMI Research, Wall Street Journal 33

34 world oil break-even prices Source: U.S. Energy Dept, PIRA Energy, Wall St Journal 34

35 shale oil weathering the storm Source: U.S. Energy Dept, Wood Mackenzie, Wall St Journal 35

36 U.S. commercial crude oil stocks will remain high on steady U.S. shale output Yellow band around storage levels represents the range between the min & max from 2012 through 2016 forecast in millions of barrels Source: Energy Information Administration (EIA) Short-Tern Energy Outlook, March

37 CME corn futures $9.00 $8.00 $7.00 $6.00 $ near futures; - forward contracts - ethanol - weak dollar - high oil prices - global demand drought corn futures 2012: $ : $ : $ : $ : $ : $ $4.00 $4.00 $3.00 record-large corn crops Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 source: Chicago Board of Trade; nearest futures history and forward contracts through

38 dollar index up 25% since July 2014 U.S. dollar index futures (spot) exponential moving average - April 2014 through March 2017 Source: Market Vision, Inc., Wall Street Journal 38

39 Source: USDA Livestock, Dairy & Poultry Update, March 15, 2017

40 protein outlook USDA WASDE - March p2017 cattle, $/cwt $ $ $ $ $ vs. year-ago 2.5% 22.8% -4.2% -18.4% -2.8% hogs, $/cwt $64.05 $76.03 $50.23 $46.16 $44.50 vs. year-ago 5.2% 18.7% -33.9% -8.1% -3.6% broilers, $/cwt $99.70 $ $90.50 $84.30 $86.00 vs. year-ago 15.1% 5.2% -13.7% -6.9% 2.0% cheese, $/lb $1.77 $2.16 $1.65 $1.61 $1.68 vs. year-ago 3.6% 21.9% -23.7% -2.4% 4.4% 40

41 CME cattle futures $ $ $ $ $ $ : $ : $ : $ : $ : $ : $ $ $ $95.00 $ near futures; - forward contracts $75.00 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Data: Chicago Mercantile Exchange; nearest futures history and forward contracts through

42 heifer slaugher as % of total expansion / contraction threshold 36% Source: USDA 42

43 90% lean beef trimmings $3.10 $2.90 $2.70 $2.50 $2.30 $2.10 $ : $ : $ : $ : $ : $ : $ USDA cash price; - forecast $1.70 $1.50 $1.30 $ st half 2017 is projected to average $2.09/lb vs. $2.14 in nd half prices look to be roughly 3% above year-ago, leaving 2017 (on average) on par with 2016 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 source: USDA weighted average prices, Market Vision forecast 43

44 Australian beef exports ,000 45,000 40,000 in metric tons to China to U.S. 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Source: USDA, Market Vision, Inc. 44

45 50% lean beef trimmings $1.70 $1.50 $1.30 $ : $ : $ : $ : $.62 - USDA cash price; - forecast 1 st half 2017 is projected to average $.75/lb vs. $.72 in $0.90 $0.70 $0.50 $0.30 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 source: USDA weighted average prices, Market Vision forecast 45

46 prices for choice middle meats 2016 seasonal high last week at $7.62 vs. $9.60 in spring high at $4.00 vs. $4.66 in #180 strip loin: -4.0% ytd; -8.9% 1 st half #184 top butt: -17.1% ytd; st half Hit a 2-yr high of $11.31 on Friday #112a ribeye: ytd; st half #189a tenderloin: -7.2% ytd; -1.9% 1 st half Source: USDA weighted average prices, Urner Barry Comtell, Market Vision design 46

47 prices for choice end meats 2016 seasonal high should be in the $2.30 range this year #120 brisket: -15.1% ytd; st half #121D inside skirt: +4.1% ytd; +11.9% 1 st half #168 inside round: ytd; -6.1% H1 cap/wedge meat: +0.2% ytd; -0.6% H1 Source: USDA weighted average prices, Urner Barry Comtell, Market Vision design 47

48 lean hog futures $ $ $ $ $ $90.00 $80.00 $70.00 $ near futures; - forward contracts PED virus wipes out thousands of litters 2013: $ : $ : $ : $ : $ $50.00 $40.00 New vaccines, better immunity, over-reaction by producers Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Data: Chicago Mercantile Exchange price per hundredweight; nearest futures history and forward contracts 48

49 pork prices drop from record highs 3-yr high lb derind bellies: +21.0% ytd; +9.7% 1 st half loin backribs: -7.7% ytd; -8.1% 1 st half seasonal high should be in the $2.80 range this year % lean trimmings: +29.4% ytd; +14.9% 1 st half lb ham: +1.7 ytd; -1.4% 1 st half 2017 Source: Urner Barry Comtell, Market Vision, Inc. 49

50 avian influenza world epidemic Source: Food & Agriculture Organization of the United Nations, Wall Street Journal 50

51 average broiler weight at slaughter Flyways: Atlantic Mississippi Central Pacific 51

52 average broiler weight at slaughter Average weight per bird in pounds Source: Market Vision, Urner Barry Comtell 52

53 chicken prices a mixed bag jumbo bnls sknls breast: +2.2% ytd; +7.1% 1 st half line run breast tenders: +4.6% ytd; +3.4% 1 st half jumbo wings: +3.5% ytd; +0.3% 1 st half bnls sknls thigh meat: +25.5% ytd; st half Source: Urner Barry west coast chicken parts market, Market Vision, Inc 53

54 Source: CME Daily Livestock Report

55 thank you! Copy of presentation: password: spring2017 Linked-In: 55