WASDE: Meat Production Expected to Rise Due to Lower Feed Costs

11:10AM Aug 12, 2014
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LIVESTOCK, POULTRY, AND DAIRY: The forecast for total meat production in 2014 is raised from last month. Production is raised for beef, pork, and broilers as lower feed prices encourage producers to raise animals to heavier weights. Turkey production is reduced slightly based on June production data. Egg production is reduced based on lower expected hatching egg production. For 2015, lower feed costs are expected to lead to higher cattle, hog, and broiler weights, but in the case of beef, reduced feedlot numbers are expected to lead to lower slaughter, more than offsetting any gains from carcass weights. Broiler producers are also expected to increase bird numbers more rapidly than previously forecast during 2015 as returns are expected to be more favorable. Egg production forecasts are unchanged.

Forecasts for 2014 and 2015 beef imports are raised as demand for processing grade beef remains strong. Exports for 2014 and 2015 are raised as demand in a number of countries remains strong, despite high beef prices. Pork imports for 2014 and 2015 are raised slightly. Despite the closure of Russia to U.S. exports into 2015, pork export forecasts for 2014 and 2015 are raised as demand in other major markets is expected to grow. Broiler exports are reduced for 2014 and 2015 as Russia’s import ban will affect sales. Turkey export forecasts are raised for 2014, but are unchanged for 2015.

Cattle price forecasts for 2014 and 2015 are raised from last month on the strength of demand and continued tight supplies of fed cattle. The annual price forecast for hogs is unchanged for 2014, but is lowered for 2015 from last month on slightly weaker expected demand. The annual broiler price forecast for 2014 is lowered, but the price for 2015 is unchanged. The turkey price forecast for 2014 is raised based on July price data. The egg price forecasts for both 2014 and 2015 are raised as demand remains strong.

The milk production forecasts for 2014 and 2015 are raised slightly as lower feed costs are expected to support higher output per cow. Fat basis export forecasts for 2014 and 2015 are lowered as Russia’s ban on imports from a number of dairy exporting countries will likely increase competition in export markets. Fat basis imports are raised as supplies in competing exporters are expected to be large. The skim-solids export forecast is raised slightly for 2014, but is reduced in 2015 as competition increases. Skim-solids imports are unchanged from last month.

Butter prices and whey price forecasts are raised for 2014 with strength in butter prices expected to carry into 2015. Cheese prices and nonfat dry milk prices are forecast higher in 2014, but their price forecasts for 2015 are unchanged from last month. Class III and Class IV prices for 2014 are raised on stronger component product prices and the Class III price forecast for 2015 is raised reflecting strength in whey prices. The all milk price is raised to $23.55 to $23.75 per cwt for 2014, but remains unchanged at $19.75 to $20.75 per cwt for 2015.


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