USDA Sees Increased 2016 Meat, Poultry Consumption

At this point in the year it is difficult to draw accurate conclusions about how the markets will play out over the year, although many market analysts have tried.  The latest to weigh in is the USDA which this week projected increased per capita disappearance of red meat, poultry and eggs in 2016.

Total red meat disappearance was expected to rise 0.76% to 105.7 pounds from 104.9 last year, while total red meat and poultry disappearance was expected to rise 1.28% to 213.6 pounds from 210.9 last year.

In its Livestock, Dairy, and Poultry Outlook report this week, the USDA said its supply and usage estimates imply increased quantities of those commodities this year.

Disappearance is what remains after exports and ending stocks are subtracted from total production.  Dividing this by the US population yields per capita disappearance.

The USDA said the forecast for increased per capita disappearance of red meat this year is based largely on increased production forecasts since exports may be hampered.  The increase in chicken disappearance, however, reflects expectations of a slower recovery pace for exports.

 

BEEF OUTPUT HURT BY WEATHER, COMPETITION

 

Snow, floods and cold in December and early January have affected much of the Southern Plains, leaving many producers concerned about overstressed cattle, illness and death loss, the USDA said.

With the combination of cooler, wetter weather producers expected to see a seasonal drop in rates of gain over the rest of the winter.  Wind chills and wet cattle were expected to cause particular problems.

Lower prices for competing meats and larger beef supplies for consumers were evident in early December prices as five-area, fourth-quarter fed steer prices bottomed at $116.64 per cwt in the week ended Dec. 20.  Fed cattle prices did rally to $132.26 by the week of Jan. 10, but they still were about $37 lower than a year earlier.

However, despite that rally, first-quarter 2016 prices were forecast to be $128 to $134 per cwt, down more than $30 from the 2015 quarter.

Feeder cattle prices also declined into early December as calves came off pasture.  Auction prices on Jan. 4 for medium 750- 800-pound No. 1 feeder steers ranged from $166 to $169 per cwt, down about $50 from a year ago.

 

BEEF PRICES SHOW STORM EFFECT

 

Wholesale beef prices in December shot higher as frigid temperatures, snow and flooding in the Southern Plains limited transportation of cattle to the feedlots and packers.  But if beef demand does not begin to improve in the first quarter, the price gains were expected to lose momentum.

Average cattle carcass weights in the latest USDA report were 839 pounds, up 11 from a year earlier.  However, weights have dropped about 16 pounds since peaking at 855 in mid-October.

Total fourth-quarter 2015 carcass weights will be lighter than initially expected because of an abrupt decline in weight gain in December, and carcass weights in the weeks ahead could reflect the effect of the winter storm on overall performance.

 

CASH CATTLE QUIET

 

Cash cattle markets Thursday were quiet as futures shot limit up.  Scattered bids of $202 per cwt were reported in Nebraska’s dressed-basis market, and at $128 in live-basis markets.  However, offers ranged from $208 to $212 dressed and $134 to $135 live.

Cattle trading last week ranged from $132 to mostly $133 to $134 per cwt on a live basis, up $1 from the previous week.  On a dressed basis, cattle traded at $209 to $212, down $1 to $2.

The USDA reported lower wholesale beef prices Thursday, with choice down $2.28 per cwt from Wednesday at $227.28, and select off $1.06 at $223.08.  The choice/select spread narrowed to $4.59 from $5.81, and there were 97 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Thursday was $157.96, down $1.44.  This compares with the Jan settlement Thursday of $158.67, up $3.67.