February 28, 2009

 

US meat production seen to falter until late 2009

US meat production this year will decline in each major category as the worsening world economy puts pressure on the industry, the USDA said Friday (Feb 27).

 

Despite production falls, lower exports are expected to boost meat supplies on the domestic market, said USDA livestock analyst Shayle Shagam.

 

To move excess meat through the market, prices for cattle, hogs and turkeys will remain weak for much of 2009, except for broiler chicken prices which are expected to move higher.

 

Shagam said there are few signs that meat production will expand until late in 2009.

 

The livestock industry has benefited from lower feed and energy prices, but the boost has been offset by the worsening global recession that has given producers little incentives to increase output.

 

Consumers have also cut back on purchases, eating more at home and buying lower-priced meat cuts.

 

USDA said Friday commercial beef production is forecast at 26.1 billion pounds this year, down 2 percent on-year. Pork output will also slightly decline to 23 billion pounds from a record 23.3 billion pounds in 2008.

 

Broiler production is estimated at 36.1 billion pounds, down 2 percent and the first annual decline in output since 1973. Still, the USDA expects wholesale broiler price to average a record of 81-87 cents per pound, up from 79.7 cents in 2008.

 

While demand is expected to lower due to economic weakness, broiler prices may benefit from its value relative to beef prices, Shagam said.

 

The dairy industry will also feel severe pressure this year, as weak product prices will lower the 2009 all-milk price estimation to US$11.30 per cwt, the lowest since 1978 and down from US$18.32 per cwt in 2008.

 

USDA dairy analysts said profit relief could come late in 2009, but by then herd liquidation will have accelerated following poor returns earlier in the year.