As cattle feeders struggle to maintain some semblance of profitability and cow/calf producers continue to build their cow herds, competing meat availability remains a constant concern.
In both cases, export markets are key to lively markets and the reduction in the availability of competing meats in the US. Disease remains an issue with pork and poultry producers, but both industries appear to have either dealt with the diseases or found work-arounds.
A market analysis and comments from various state extension services in cooperation with the USDA has been compiled by the Livestock Marketing Information Center and is highlighted here.
THE DISEASE PICTURE
The most prominent disease issues to pop up for the pork and poultry industries has been the Porcine Epidemic Diarrhea virus and Highly Pathogenic Avian Influenza. PEDv was first documented during the spring of 2013 and HPAI became a serious issue from December 2014 through June 2015.
PEDv was the culprit in the deaths of millions of baby pigs, resulting in dramatic reductions in available market hogs in 2014, and tight supplies were behind the record-high hog prices at the time. Since then, pig mortality has abated.
HPAI swept across important Midwest egg and turkey producing states, resulting in bird deaths and widespread flock depopulations of turkey and egg-laying operations. Key foreign markets banned US poultry and egg products, including broilers, which essentially escaped HPAI. Some of these bans remain in place.
POLITICS ADDED MARKET WRINKLES
As US pork and poultry producers came to grips with their respective disease issues, global politics and economies became more of an issue. Economic growth in importing countries has been lackluster along with a dramatically strengthened US dollar.
Geopolitical events also have provided headwinds to exports with those related to Russia having hurt US pork and poultry exports directly and indirectly. In retaliation for international sanctions stemming from Russia’s overtaking of the Crimean Peninsula and its activities in Ukraine, in August 2014, Russia imposed a ban on many agricultural and food products, including meat and poultry from Europe and North America.
Earlier in 2014, Russia imposed pork import restrictions on the EU because of African Swine Fever. In 2013, Russia was the EU’s largest market, importing 20% of total EU pork exports.
In terms of hog slaughter and pork supply for the rest of 2016, most of the uncertainty surrounds farrowing intentions. The latest Quarterly Hogs and Pigs Report had March-May intentions at 99.5% of a year ago, but a larger-than-expected drop was reported for June-August at only 96.5%.
Most of the pigs born in March-May will reach slaughter weight in late summer and fall, while June-August births will be ready in December and early 2017. Additionally, pigs weaned per litter remain on an uptrend.
2016 US broiler production is forecast to rise 4% to 5% from 2015, but exports are expected to rebound from 2015’s depressed level, perhaps 4% to 8%. Still, tonnage could be 1 billion pounds (7% to 8%) below the approximately 7.3 billion pounds reached in 2012, 2013 and 2014.
CASH CATTLE MARKET TRADES LOWER
Cash cattle markets Thursday traded about $3.00 per cwt lower on a live basis at $124 per cwt. In dressed markets, cattle traded at $195 to $197, down $3 to $5.
The USDA’s choice cutout Thursday was down $2.31 per cwt at $212.50, while select was off $2.50 at $203.09. The choice/select spread widened to $9.41 from $9.22 with 115 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Wednesday was $144.81 per cwt, down $1.81. This compares with the Apr CME expiration Thursday of $145.52, down $0.77.