Besides painting a bearish picture for grains and soybeans, this month’s World Agricultural Supply and Demand Estimates report pointed to increased total 2014 meat and poultry production.
Increased feed production, and the lower prices that are expected to result, encourage producers to raise cattle, hogs and chickens to heavier weights, resulting in more meat production.
The WASDE prediction of larger cattle, hogs and chickens extends into 2015 as well as lower feed costs lead to the heavier weights. However, reduced feedlot numbers are likely to offset expected heavier weights next year, resulting in lower beef production.
Broiler integrators also were expected to boost production in 2015, possibly exceeding previous estimates, as returns are expected to be more favorable. The expected inability of beef producers to keep pace may help open the door to greater chicken production.
In the WASDE report, the USDA estimated 2014 beef production at 24.561 billion pounds, up 23 million, or 0.09%, from its July estimate. However, the 2014 estimate was down 1.159 billion, or 4.51%, from the 2013 total. For 2015, WASDE estimated beef production at 24.325 billion pounds, down 236 million, or 0.96%, from the 2014 estimate.
Pork production this year was forecast at 22.779 billion pounds, up 19 million, or 2.5%, from its July estimate. This is down 408 million, or 1.76%, from 2013’s total of 23.187 billion pounds. As the industry gets a grip on the Porcine Epidemic Diarrhea virus, production next year is expected to jump 501 million pounds, or 2.20%, to 23.280 billion.
Broiler production this year, which often competes more effectively with beef than does pork, was expected to rise to 38.399 billion pounds, up 166 million, or 0.43%, from the July estimate and up 569 million, or 1.50%, from the 2013 total of 37.830 billion pounds. WASDE projected 2015 broiler production at 39.345 billion pounds, up 946 million, or 2.46%, from this year.
PRICE PROJECTIONS MIXED
But the outlook for producers is not totally rosy, as WASDE forecast mixed results for average annual farmgate prices.
Annual average 5-area USDA direct steer prices were estimated within a range of $150 to $153 per cwt on a live basis, up $3 to $4 from the July estimate of $146 to $150 and well above 2013’s $125.89. The expected 2015 price range is much wider, reflecting less certainty, but the upper limit of the range remains at $162, while the lower edge of the range declined $1 to $149.
Barrow and gilt prices for this year were projected at $79 to $81 per cwt, unchanged from the July estimate, and up from last year’s $64.05 average. But increased production was expected to eat away at returns, dropping average prices into a range from $72 to $78.
Broiler prices for this year also were projected lower than the July estimate at $1.03 to $1.06 a pound from July’s $1.06 to $1.08. However, next year was less certain as the forecast range widened to $1.00 to $1.08.
CASH CATTLE REMAINS QUIET AS FUTURES DROP
While a few trades were rumored Tuesday in Nebraska and Iowa at $155 per cwt live and $248 dressed to a regional packer, bids and offers elsewhere in the Plains were thin. Asking prices were reported generally around $162 live and $253 to $255 dressed, and the outlook for this week generally is bearish.
Boxed-beef prices were mixed Tuesday with the choice cutout at $258.15 per cwt, down $1.29 and select up $1.51 at $253.13. The choice/select narrowed to $5.02, and there were 142 loads of fabricated product sold into the spot market.