Import data for all of 2017 shows the US is a relatively small importer of meat and dairy products, which is consistent with past years, the USDA’s Economic Research Service said in its monthly Livestock, Dairy, and Poultry Outlook Wednesday.
CATTLE/BEEF
In 2017, US beef imports were 11.3% of total domestic disappearance. In 2018, forecasts for US beef imports leave the ratio nearly unchanged at 11.0%.
This month, forecast beef production for 2018 was revised downward by 40 million pounds to 27.69 billion. In part, this change reflected a combination of slower-than-expected slaughter and lighter cattle weights in the first quarter.
Based on USDA Agricultural Marketing Service reporting of 2018 federally inspected slaughter through the week of Feb. 24, weekly cow and heifer slaughter was well above 2017 levels. In contrast, the pace of steer slaughter remained close to last year.
As a result, year-to-date cow and heifer slaughter is up roughly 5.6%, but steer slaughter is up only 0.3%. The proportion of heifers and cows slaughtered relative to total slaughter has increased from last year.
In addition, through late-February steer dressed weights were at the same level, and falling at a similar pace, to 2017. This mix of higher cow and heifer slaughter and lighter steer dressed weights combined to pressure forecasts for cattle dressed weights during the first quarter below previous expectations.
Based on the current pace of US beef imports and strong domestic demand for lean beef, 2018 import estimates were revised upward.
PORK/HOGS
For pork, imports accounted for 5.3% of disappearance last year. The forecast ratio this year was somewhat smaller at 4.8%, mostly because of increased domestic production.
Most imported pork comes from Canada and the EU, although imports from Poland have accelerated recently.
Commercial pork production was expected to be 26.9 billion pounds in 2018, 5.2% above a year ago. This forecast represents an increase of 25 million pounds from last month’s forecast and is because of higher-than-expected dressed weights.
That upward revision is notable because of the lower-than-expected slaughter pace of slaughter so far this year. Higher weights have more than offset lower-than-expected slaughter numbers.
Several factors likely explain this year’s higher weights. First, despite recent feed price increases related to South American weather events, costs of feeding hogs, which typically constitute more than half of production costs, remain moderate, and producer returns in the first two months of the year have been positive.
Further, winter weather conditions in principle hog production areas have not been unduly harsh, and most packer pricing grids tend to favor heavier carcasses, which drive down processing costs.
Hog prices for the first quarter were expected to average $51-$52 per cwt, almost 4% more than a year ago, largely on the strength of increased demand for hogs from expanded processing capacity.
CATTLE, BEEF RECAP
A total of 113 fed cattle sold Wednesday on the Livestock Exchange Video Auction at $127 per cwt, up $1 from a week earlier.
Cash sales this week were starting out steady to $1.00 per cwt higher at $126 to $128 on a live basis. No dressed-basis trading was reported but took place last week at $204 to $204.50, steady to down $0.50.
The USDA’s choice cutout Wednesday was up $0.38 per cwt at $224.11, while select was up $0.26 at $217.01. The choice/select spread widened to $7.10 from $6.98 with 87 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $143.25 per cwt, up $0.08. This compares with Wednesday’s Mar settlement of $142.05, down $0.50.