The People’s Republic of China’s decision to end its zero-COVID policy restrictions was expected to improve demand for pork and beef products in 2023, the USDA’s Foreign Agriculture Service said in a semi-annual report.
However, Brazil’s decision to suspend beef exports to China at the end of February following a suspected case of Bovine Spongiform Encephalitis could affect supply as alternative suppliers may not bridge the potential supply gap in 2023.
Pork production and imports, and beef production were forecast to grow in 2023, the report said.
CATTLE HERD TO GROW SLOWLY
The 2023 cattle herd was expected to experience slower growth than in 2022 because of an already abundant cattle inventory, the FAS said. In addition, operating costs were higher because of higher feed costs.
Furthermore, the industry remained challenged by a general lack of experience across the sector, the report said. The 2023 calf production forecast was expected to remain unchanged at nearly 52.6 million head.
Cow inventory was expected to increase slightly in 2023, but producers were expected to be slower in restocking their herds because of the already-large cattle supply, the FAS said.
In 2022, the cattle herd experienced slower growth as farms slowed restocking and, in some instances, slaughtered cows and calves amid lower profits, the report said. Consequently, 2023 beef cow beginning stocks were only marginally higher than in 2022.
Overall per-cow efficiency across the PRC’s small and medium-scale farms, which dominate beef production, was not expected to improve, the FAS said. Large beef cattle farms were expected to remain the minority in 2023.
Cattle imports in 2023 were forecast to decline to 270,000 head from 350,000 in 2022 because of the large herd and high input costs, the report said. Buyers mainly import from New Zealand, Australia, Uruguay and Chile.
Live beef cattle imports are mainly used to improve herd genetics, the FAS said. New Zealand and Australia mostly export dairy cattle, while Uruguay and Chile mainly export beef cattle.
HOG PRODUCTION TO DECLINE SLIGHTLY
China’s 2023 pig crop was forecast to decline 2% to 700 million head because of a lower total sow inventory in 2022 compared with 2021, the FAS said. In 2022, low hog and pork prices forced many producers to reduce sow inventories, but the sow inventory rebounded in late 2022 following a recovery in hog prices, the FAS said.
Two Animal diseases, including African Swine Fever, were expected to be endemic, increasing production costs for the sector, the report said. However, the effect of ASF outbreaks on commercial production was limited as producers appeared to have adjusted production practices to manage outbreaks.
Live hog imports were expected to be unchanged from 2022, while exports were forecast to continue recovering from ASF.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $165.71 to $166.59 per cwt, compared with last week’s range of $159.00 to $165.08. FOB dressed steers, and heifers went for $258.17 to $261.39 per cwt, versus $254.08 to $261.83.
The USDA choice cutout Tuesday was down $2.27 per cwt at $287.93 while select was up $1.02 at $277.49. The choice/select spread narrowed to $10.04 from $13.73 with 89 loads of fabricated product and 17 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.55 to $1.70 a bushel over the May corn contract. Bids in Kansas were steady at $0.75 over May, which settled at $6.34 1/4 a bushel, down $0.02 3/4.
The CME Feeder Cattle Index for the seven days ended Monday was $188.04 per cwt, up $0.83. This compares with Tuesday’s Mar contract settlement of $192.12 per cwt, up $0.05.