Source: Rita Jane Gabbett, MEATINGPLACE, 2/20/18


Favorable returns at the start of the projection period and robust demand provide incentives for continued growth of the U.S. livestock sector over the next ten years, according to USDA.

In a new report, USDA’s Economic Research Service predicted declining feed price ratios for the cattle industry reflecting lower cattle prices and suggesting lower returns to production.  In the hog industry, the feed price ratio is expected to decline and then recover some of its value before flattening out while the broiler industry is expected to experience an overall relatively stable feed price ratio.

Meanwhile, both domestic and global demand for meats and dairy products are expected to remain strong. Despite the lower expected returns, red meat and poultry production all increase over the projection period.  

Beef
Low corn prices in the first two years of the projection period raise the beef cattle feed price ratio, helping boost production.  As cattle prices decline, the ratio also declines, slowing production.  Despite slowing cattle numbers, increased slaughter weights help contribute to production gains.  Overall, production levels are expected to rise at roughly 1 percent per year, increasing from 26.5 billion pounds in 2017 to over 29 billion by 2027.

Nominal beef cattle prices drop over much of the projection period before increasing at the end of the period.  

Pork
The low corn prices in the first two years also raise the hog feed price ratio, creating greater incentives to increase farrowings and continue the upward trend in pork production, with pork production expected to grow the fastest of the three.

Lower pork prices decrease the feed price ratio early in the projection period, but hog prices rebound in the second half of the decade.  As with beef, increased slaughter weights contribute to the increase in pork production.  While pork production trails beef production for most of the decade, by 2027, both meats are being produced at the same level of roughly 29.1 billion pounds.

Chicken
Broiler prices in the next decade are expected to be relatively stable following a substantial increase in 2017.  The feed price ratios that result from stable broiler prices and moderate feed costs remain favorable for the continued expansion of broiler production.

Larger numbers of birds and higher average broiler slaughter weights are also expected to contribute to broiler production growth.

Turkey producers face similar price patterns as broiler producers, with an associated modest growth in turkey production over the decade.  

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