The USDA’s Foreign Agricultural Service in Beijing, China, Tuesday forecast that economic headwinds would continue to affect domestic consumption of pork and beef in 2024.
In a semi-annual report, the China FAS office said 2024 swine and pork production would be down about 3% as persistently low live hog and pork prices weigh on producers.
However, pork imports may grow marginally to offset the forecasted decline in domestic pork production, the report said. Beef imports in 2024 could decline because of the high inventory carried over into 2024 and an expected flat demand.
Swine and cattle imports also could decline because of financial challenges among producers.
SWINE PRODUCTION TO DIP
The FAS office revised its swine production estimate for 2024 to 695 million head with a year-over-year decline of 3% from a lower sow inventory, compared with 2023. Herd liquidation as a result of low swine and pork prices and lingering animal diseases in 2023 are the two major reasons for the lower sow inventory projection.
Swine producers started to expand production to rebuild their herds in 2020 and 2021 when African Swine Fever severely hurt the industry, the FAS office said. The negative effects of the large rebound of China’s swine herd manifested in 2023 when production exceeded market demand.
Average swine prices remained low through 2023, causing losses across the breeding industry, the report said. According to the National Development and Reform Commission, except for some slight profits from August to September, producers operated at a loss for most of 2023.
The Ministry of Agricultural and Rural Affairs indicated it was the first year since 2014 that swine producers suffered such large losses.
SLOW CATTLE HERD GROWTH
The China FAS office revised its 20224 calf production forecast down to 55 million head with a slower-than-expected growth, the report said. Despite government policies encouraging cattle herd growth, lower prices in 2023 limited the growth of cattle herds.
China published its five-year action plan in 2021 to improve the development of the beef and lamb sectors, the reports said. Local governments of major beef production areas continued to implement this plan in 2023 by providing subsidies to local beef cattle breeders, encouraging cattle herd expansion.
However, low cattle prices in 2023 kept profit margins small, resulting in a slower growth of beef cow herds, the FAS said. Throughout 2023, beef cattle and beef prices declined, with beef cattle prices witnessing a sharper decline than beef prices according to industry sources.
The forecast for cattle imports in 2024 remains the same with the official USDA forecast at 125,000 head, the FAS said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $185.00 per cwt to $185.99, compared with last week’s range of $183.58 to $186.24 per cwt. FOB dressed steers, and heifers went for $288.43 per cwt to $293.03, compared with $287.28 to $292.50.
The USDA choice cutout Tuesday was up $1.71 per cwt at $310.59 while select was up $0.72 at $299.60. The choice/select spread widened to $10.99 from $10.00 with 71 loads of fabricated product and 15 loads of trimmings and grinds sold into the spot market.
The daily weighted average USDA listed wholesale price for fresh 90% lean beef was $319.74 per cwt, and 50% beef was $102.67.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.55 to $1.75 a bushel over the May corn contract, which settled at $4.41 3/4 a bushel, unchanged.
The CME Feeder Cattle Index for the seven days ended Friday was $248.26 per cwt, up $0.02. This compares with Tuesday’s Mar contract settlement of $248.97, up $0.72.