USDA Boosts Red Meat, Poultry Production Estimates

The USDA Tuesday raised its estimate of total 2016 US red meat and poultry production from its January estimate as higher pork and chicken production more than offset lower estimates of beef and turkey output.

The lowered beef production estimate could be considered somewhat bullish to beef and cattle markets, but gains likely will be held in check by higher production and lower prices for competing meats.  Estimates of beef and pork imports were left unchanged at 2.845 billion and 1.0 billion pounds, respectively.




The USDA made the predictions in its monthly World Agricultural Supply and Demand Estimates report.  In the report, World Agricultural Outlook Board economists referred to the USDA’s Cattle Inventory Report of Jan. 29, which estimated continued increases in cattle inventory.  The January report also counted a larger number of cattle outside of feedlots.

However, with lower year-over-year placements of young cattle on feed for final growth and fattening in the fourth quarter of 2015 and only modest increases expected in first-half 2016 placements, fed cattle slaughter forecasts for 2016 were reduced.

Partly offsetting the lower fed cattle slaughter estimate were expectations of increased cow slaughter and larger fed cattle carcass weights.

All of that was expected to produce 24.580 billion pounds of beef in 2016, down 25 million, or 0.10%, from the January projection of 24.605 billion.  However, and perhaps more importantly, the new estimate is up 890 million, or 3.76%, above the revised 2015 production estimate.

Estimated cattle prices for this year were raised from the January report on higher expected prices in the first quarter.  The average live-basis fed cattle price for this year was expected to fall in a range of $133 to $142 per cwt, up slightly from the January estimate of $132 to $142.

But that’s little consolation to cattle feeders who are losing hundreds on each animal sold for slaughter.  This is especially distressing considering cattle feeders received an average annual price of $148.12 per cwt last year and still lost money.




The good news for cattle feeders came from the Bureau of Labor Statistics, the USDA’s Economic Research Service and compiled by the Livestock Marketing Information Center.   The annual retail all fresh beef demand index at 92, using 1990 as 100.

The demand index for 2015 was the highest since 1991 when it was at 96.  If retail beef demand continues to rise, beef and cattle prices likely will be supported in spite of higher pork and poultry production.




Cash cattle markets this week remain undefined.  Bids from packer buyers were reported at $132 per cwt on a live basis against asking prices of $138.  Dressed-basis bids were not established, but asking prices were around $215.

The USDA reported lower wholesale beef prices Tuesday, with choice down $0.78 per cwt at $218.03, and select off $2.98 at $213.60.  The choice/select spread widened to $4.43 from $2.23, and there were 94 loads of fabricated product sold into the spot market.

The USDA said chucks were lower while ribs, rounds and loins were steady to weak.  Trimmings were steady to firm on moderate demand and offerings.

The CME Feeder Cattle Index for the seven days ended Monday was $159.76 per cwt, down $0.39.  This compares with Mar’s Tuesday settlement of $149.00, down $0.32.