As if supplies weren’t already more than ample, the USDA Friday raised its estimated 2016 total red meat and poultry production from the November report.
In its December World Agricultural Supply and Demand Estimates report, the USDA estimated total red meat and poultry production to 97.517 billion pounds, up 4 million, or 0.004%, from 97.513 billion in the November report.
That doesn’t seem like much, but it’s bearish for cattle and beef markets because production estimates for all other major meats declined from the November report to the December report.
SLAUGHTER BOOSTS BEEF PRODUCTION ESTIMATE
The report said the 2016 beef production estimate was raised because of the current pace of slaughter. However, for 2017, the beef production forecast was lowered, “reflecting lower expectations for cattle placements in late 2016.”
But total beef production next year likely won’t be affected one-on-one with the lower placements and slaughter since cow slaughter was expected to increase, WASDE said.
Actually, overall cow slaughter has increased this year over last year since about April. It’s been a little hard to track and compare with 2015 because of some weekly fluctuations that usually were associated with holiday weeks.
USDA data show a gradual increase in cow slaughter through the last half of the year.
BEEF TRADE SEEN HIGHER
Expectations for beef imports for this year were raised 10 million pounds, or 0.33%, to 3.021 million pounds from the November estimate of 3.011 million based on a recent increase in the pace of trade. However, the forecast for 2017 beef imports was left unchanged at 2.680 million.
Beef import estimates for this year and next were below the 2015 total of 3.371 million pounds as domestic slaughter and tonnage increased along with the general herd size.
The beef export forecast for 2016 was raised 25 million pounds, or 1.02%, to 2.484 billion from the November estimate of 2.459 billion, reflecting stronger export demand, the report said but the 2017 estimate was left unchanged at 2.630 billion.
CATTLE PRICES SEEN FADING IN MID-2017
Cattle prices were forecast higher in the WASDE report for the rest of this year but were expected to decline through 2017 as demand has faded. This increased demand pull on supplies was expected to carry into 2017.
The latest projection for annual 2016 average prices for fed steers was $120.56 per cwt, up $0.62, or 0.52%, from the November estimate of $119.94.
That was down $27.56, or 18.6%, from the 2015 annual average of $148.12 per cwt.
For 2017, the average price was projected to range from $103 to $111 per cwt, up from November’s $102 to $110 estimate.
CASH CATTLE TRADE LIGHTLY
Superior auction prices were $1 to $2 per cwt lower last week at an average of $110.31, down $2.20, in a range from $111.75 to $112 in the south to $109 to $111 in the north.
Cash action then got underway with at $111.75 to $112 on a live basis, fading to $110 later. Dressed-basis trading was reported at $169 to mostly $170, down $5 to $6.
The USDA’s choice cutout Friday was $0.54 per cwt lower at $188.94, while select was up $0.26 at $171.68. The choice/select spread narrowed to $17.26 from $18.06 with 79 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Thursday was $130.65 per cwt, down $0.42. This compares with Friday’s Jan settlement at $125.95, down $0.65.