USDA Lowers 2015 Total Meat Production Forecast

The USDA Wednesday lowered its forecast for 2015 total meat production to 95.137 billion pounds from 95.583 billion but raised its estimate of 2016 production to 97.383 billion from 97.178 billion, saying 2015 beef production will not be as high as was estimated just a month ago.

The USDA made its estimates known in its monthly World Agricultural Supply and Demand Estimates report and went on to say its estimate of beef production this year was lowered as fed cattle slaughter in the second quarter is running below previous estimates.  Cow and bull slaughter estimates also were lowered for the year.

No explanation was given, but sources said the reductions in cow and bull slaughter may be tied to herd expansion efforts.  The cows and bulls are being kept for another year of breeding.

Placements of cattle into feed yards in late 2015 were expected to be higher as herd sizes grow, a move made possible by improved forage conditions in much of the country improve with drought-busting rain.  The extra forage is allowing farmers and ranchers to keep those cows and bulls at home and even augment the female side of the herd with a few more retained heifers.

Forecasts for 2015 and 2016 beef imports were raised as demand for processing beef remains strong, cull cow slaughter is down and a generally stronger US dollar makes imported lean beef more attractive.

No change was made to the beef export forecast.

Cattle price estimates for this year and next were reduced from last month’s estimate as expectations for rising supplies of slaughter cattle increase.

 

PORK PRODUCTION FORECAST HIGHER

 

But while estimated beef production this year is down, the WASDE report raised its forecast for 2015 pork production as second-quarter slaughter exceeds expectations.

The market now is awaiting the June 26 release of its quarterly Hogs and Pigs report for its next forecast of farrowing, or birthing, intentions of hog producers for the rest of the year.

Pork imports for this year were reduced as domestic production increases and overwhelms imported product demand.  However, the USDA extrapolated current pork exports and raised the estimated level of pork exports.

Hog price estimates for the year were higher, but unchanged for 2016.

 

CHICKEN PRODUCTION ESTIMATE RAISED

 

To make matters worse for cattle producers, broiler production for 2015 and 2016 is being raised from last month’s estimate based on hatchery data.

Chicken export projections for 2015 were lowered as demand for US product declines.  Sources also said this decline in US product could be tied to import bans put in place because of the US’ worst outbreak of Highly Pathogenic Avian Influenza.

Broiler prices were unchanged as continued strong domestic demand was expected to absorb increased supplies.  The market still expects a noticeable shift in consumer demand from high-priced beef to chicken, although beef demand currently is stronger than many had expected, given its high price.

 

CASH FED CATTLE MARKETS QUIET

 

No trade was reported in cash fed cattle markets through Wednesday this week.  Bids were reported at $152 per cwt on a live basis in Kansas, but asking prices held at about $158 to $160 as feeders suffering large losses on each animal sold held out for more.  No dressed-basis bids were reported, but asking prices held at $250 to $252.

Prices last week ranged from $155 per cwt on a live basis up to $158.

Beef prices Wednesday were slightly higher, with the USDA choice cutout at $247.66 per cwt, up $0.46, and the select cutout at $240.73, up $0.02.  Volume was heavy with 122 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $224.03 per cwt, down $0.02.