Favorable returns and robust demand provide incentives for continued meat growth over the next 10 years, said the USDA’s Interagency Agricultural Projections Committee.
Nominal beef cattle prices drop over much of the period before increasing at the end, while nominal broiler and hog prices generally increase, after an initial decline, as the population and export demand were expected to continue growing.
FEED PRICE RATIOS WEAKEN
Cattle feed/price ratios were expected to decline, reflecting lower prices and suggesting lower production returns.
The hog industry’s feed/price ratio was expected to decline and then recover some before flattening.
The broiler industry was expected to experience a relatively stable feed/price ratio.
Domestic and global meat and dairy demand was expected to remain strong. Production also was forecast to remain strong despite lower expected returns.
Low corn prices in the first two years of the decade raised the beef cattle feed/price ratio, helping to boost production. As cattle prices decline, the ratio also declines, slowing production.
Despite slowing cattle numbers, increased slaughter weights help contribute to expected production gains of roughly 1% a year, going from 26.5 billion pounds in 2017 to more than 29 billion by 2027.
HOG PRICE RATIO ALSO AFFECTED
Low corn prices in the first two years also raise the projected hog feed/price ratio. This may boost incentives to increase farrowings and continue the upward production trend, which was expected to grow faster than beef or poultry.
Lower pork prices decrease the feed/price ratio early in the period, but hog prices rebound in the second half. As with beef, increased slaughter weights contribute to greater production.
While projected pork production trails beef, by 2027 both were seen at roughly 29.1 billion pounds.
BROILER PRICES SEEN ABOUT STEADY
Broiler prices in the next decade were expected to be relatively stable following 2017’s substantial increase. The resulting feed price/ratios remain favorable for continued expansion.
Larger numbers and higher average broiler slaughter weights also were expected to contribute to production growth.
PER CAPITA MEAT USE FORECAST HIGHER
Per capita use of red meat and poultry was projected to rise from roughly 218 pounds in 2017 to 222 pounds by 2027, marking a rebound from the 2014 low of 199, a level not seen since 1991.
Near-term per capita beef disappearance was expected to increase, followed by a mild downward trend, then flattening at levels higher than those seen currently.
Projected beef imports exceed exports as processing beef demand remains strong. Per capita disappearance increases to 59 pounds, up from 57 in 2017.
Pork production and per capita disappearance were expected to continue growing through 2019, after which it could flatten at nearly 52 pounds.
Throughout the decade, pork exports continue to dominate imports. Production gains were expected to be sufficient to accommodate this along with increased domestic demand, which largely is from population growth.
Broiler per capita disappearance was expected to follow suit, with a mild decline in the last couple years, ending at a little more than 92 pounds.
CATTLE, BEEF RECAP
No fed cattle sold Wednesday on the Livestock Exchange Video Auction for the second straight week.
Cash cattle traded Wednesday at mostly $128 to $129 per cwt on a live basis, down $1 to $2 from the bulk of last week’s action. Dressed-basis sales were reported in Iowa at $205, about steady.
The USDA’s choice cutout Wednesday was up $1.45 per cwt at $217.37, while select was up $1.52 at $211.92. The choice/select spread narrowed to $5.45 from $5.52 with 82 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $147.99 per cwt, down $0.12. This compares with Wednesday’s Mar settlement of $146.65, down $3.15.