USDA: Beef, Chicken Prices Could Rise Over Decade

When the USDA’s Interagency Agricultural Projections Committee began work on its latest 10-year projections, released in conjunction with its annual Agricultural Outlook Forum, economists may not have predicted Russia’s invasion of Ukraine.

USDA economists may not have worked an invasion into their outlooks since one of their basic assumptions is a long-term baseline of stability, making warnings about volatility especially poignant in light of Thursday’s invasion.

Thursday’s comments concentrated on the USDA’s outlook for grain markets.  Today’s will look at livestock and meat, as well as farm income.

 

CATTLE, CHICKEN, TURKEY PRICES SEEN RISING

 

In contrast to crops, prices for cattle, chicken and turkey, along with eggs and milk were expected to rise steadily throughout the projection period.  Hogs were expected to decline, at least initially.

With rising and comparatively high cattle prices compared to most of the past two decades, growth in cattle inventories and rising slaughter weights support growing beef production during the projection period, the Outlook report said.

Broiler (young chicken) prices were projected to grow during the projection period after recovering from the 2019 low, the USDA said.  Chicken production was projected to grow steadily as the broiler-to-feed price ratio remains relatively steady and domestic demand and exports continue to rise.

After the 2021 spike, hog prices were expected to decline toward levels like the second half of the last decade by the middle of the projection period, before experiencing a slight uptick after 2029, the USDA said.

 

FARM INCOME TO DECLINE

 

After two straight years of increases beginning in 2020, net farm income and net cash income were projected to decrease in 2022, the USDA said.  Net farm income was projected to decrease $15.8 billion, or 13.5%, to $101 billion in 2022 from $116.8 billion in 2021.

Net cash farm income was projected to decrease $24 billion, or 18.1% to $109 billion in 2022 from $133 billion in 2021, the USDA said.  Lower government payments, including those related to the COVID-19 pandemic, relative to 2021 was the primary contributor to the projected decline in net farm income for 2022.

Farm cash receipts were projected to decrease through 2024 compared with the previous year after increasing in 2021 to a record high $427.3 billion, the USDA said.  However, beginning in 2025, cash receipts were expected to increase through 2031.

The increase in cash receipts was projected because of steady domestic and international demand for US agricultural products.

Projected US agricultural export value increases by 1.9% in fiscal year 2022 surpassing the 2021 record of $172.2 billion, mainly because of increases in livestock and meat products, cotton and oilseeds.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $142.61 to $144.23 per cwt, compared with last week’s range of $140.55 to $143.00.  FOB dressed steers and heifers went for $221.90 to $224.53 per cwt, versus $218.70 to $224.02.

The USDA choice cutout Thursday was down $1.64 per cwt at $259.24, while select was down $4.41 at $254.55.  The choice/select spread widened to $4.69 from $1.92 with 128 loads of fabricated product and 42 loads of trimmings and grinds sold into the spot market.

The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.15 to $1.25 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.20 over Mar, which settled at $6.95 a bushel, up $0.11 1/4.

Five heifer contracts were tendered for delivery against Feb on Thursday.

The CME Feeder Cattle Index for the seven days ended Wednesday was $161.82 per cwt down $0.44.  This compares with Thursday’s Mar contract settlement of $159.45 per cwt, down $3.32.