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USDA predicts more meat this year, less next year
Story Date: 8/13/2012
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Source: Rita Jane Gabbett, MEATINGPLACE, 8/10/12
The forecast for 2012 total red meat and poultry production is raised from last month but the forecast for 2013 is reduced as higher feed prices are expected to pressure producer returns.
Beef
Beef production is raised from last month for both 2012 and 2013 due to higher expected placements in feedlots and increased dairy cow slaughter in late 2012 and during 2013.
Carcass weights are forecast higher based on recent weight trends, but higher feed prices are expected to temper the increase and carcass weights are expected to be lower in 2013 compared to 2012.
Beef exports are reduced for both 2012 and 2013 as exports have slowed and tight supplies of pork and poultry are expected to support domestic beef demand.
Cattle prices are reduced from last month with the expectation of larger fed cattle marketings in both 2012 and 2013. However, prices are likely to remain strong in 2013, as total meat supplies are tight.
USDA lowered average steer prices in 2012 to a range of $119 to $122 per hundredweight from last month’s range of $123 to $126. For 2013 it lowered its forecast to a range of $122 to $132 from last month’s $124 to $135.
Pork
Pork production is reduced from last month for both 2012 and 2013. The reduction for 2012 reflects lower slaughter in the third quarter and lighter expected carcass weights through the year.
As a result of high feed prices and recent hot weather, forecast pig crops are lowered in the second half of 2012 with declines continuing into 2013. Pork production is forecast lower in 2013 due to a combination of smaller hog supplies and lower expected carcass weights.
Pork exports are reduced for both 2012 and 2013.
Hog prices are raised in both years due to smaller hog supplies. USDA now sees average prices for barrows and gilts in a range of $62 to $63 during 2012 and from $62 to $67 in 2013.
Poultry
Broiler production is raised in 2012, as production in the second quarter was higher than forecast last month and hatchery data points to higher than previously forecast levels of production in the third quarter. However, high feed costs are expected to result in lower broiler production in 2013.
Turkey production is forecast lower in 2012 on lower second-quarter production. The production forecast for 2013 is reduced as feed prices squeeze producer returns.
Poultry exports are reduced for both 2012 and 2013.
Broiler prices are reduced in 2012 due to larger expected supplies and somewhat weaker demand, but for 2013, tighter supplies are expected to help support higher prices. Turkey price forecasts are raised on lower production.
USDA forecast broiler prices in a range of 82 cents to 84 cents per pound in 2012 and in a range of 84 cents to 90 cents per pound in 2013.
Analyst raises concerns
BMO Capital Markets analyst Kenneth Zaslow questioned USDA's forecast that corn use for feed would decline to 4 billion bushels from 4.8 billion predicted last month.
"[The] USDA demand outlook appears overly optimistic as the protein industry has yet to make any significantly changes to production," he wrote in a note to investors. "With no production cuts on the horizon and the need for corn to move higher, chicken cutout margins likely will further deteriorate and recent optimism regarding production cuts appears misplaced."
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