Robust demand provides incentives for continued growth of the US livestock sector over the next 10 years, said the USDA’s Agriculture Outlook Board in its latest 10-year outlook for US agriculture.
Despite expected declining revenues over the next 10 years, red meat and poultry production were expected to increase over the projection period, the report said.
CHALLENGING CATTLE FEED/PRICE RATIOS SEEN
In the beef cattle industry, the feed price ratio (cattle price/feed price) was expected to decline over the projection period reflecting lower cattle prices and higher feed prices, suggesting lower returns to production, the outlook said.
As cattle prices decline, the price/feed ratio also drops, reducing production incentives for cattle producers, the board said. Despite expected declines in cattle numbers over the middle part of the forecast horizon, expected increases in slaughter weights support gains in beef production.
Overall, beef production levels were expected to rise at less than 1% per year, increasing from almost 28 billion pounds in 2019 to nearly 30 billion by 2028.
HOG PRICES TO DECLINE THEN RECOVER
In the hog industry, the feed price ratio was expected to decline and then recover partially by the end of the decade.
Rising corn prices and lower pork prices in the first half of the next decade also lower the hog feed price ratio (hog price/corn price), the Board said, creating incentives to decrease farrowings.
However, increased slaughter weights and the continued commercialization of the industry continue the projected upward trend in pork production, the report said. While pork production trails beef production for most of the decade, by 2028, pork production was expected to edge beef production at just over 30 billion pounds.
CHICKEN FEED/PRICE RATIO ALSO SEEN RECOVERING
The broiler industry’s feed price ratio also was expected to decline in the first part of the decade and gradually increase by the end, the Outlook Board said.
Broiler slaughter was expected to slow over the coming decade, but continued projected growth in slaughter weights could lead to the further expansion of broiler production, the Outlook Board said.
Turkey producers were expected to see slowly rising prices over the coming decade, with relatively stable production.
Meanwhile, domestic and global demand for meats and dairy products was expected to remain strong, the report said.
Per capita disappearance of red meat and poultry was projected to rise to nearly 223 pounds by 2028 from more than 214 pounds in 2017. In 2019, per capita disappearance was expected to be nearly 222 pounds, representing a record level.
US per capita meat disappearance
Per capita beef disappearance was expected to increase in the first years of the projection period, stabilizing around roughly 58 and 59 pounds. Beef exports were expected to exceed imports as global beef demand grows
CATTLE, BEEF RECAP
Light cash cattle trading was reported at $124 per cwt on a live basis, down $1 to $2 from last week. Dressed-basis sales last week were at $206 to $208, steady to up $1.
The USDA choice cutout Wednesday was up $0.41 per cwt at $226.14, while select was up $0.48 at $218.97. The choice/select spread narrowed to $7.17 from $7.24 with 100 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $142.44 per cwt, down $0.06. This compares with Wednesday’s Apr contract settlement of $144.75, down $0.10.