US livestock, milk set for growth as farms suffer

 

 

US cattle and milk prices are primed for double-digit growth, but dairy and livestock farmers face a tough year, as grain prices are adversely affecting chicken producers, according to a projection by a top US official.

 

Joe Glauber, chief economist at the USDA, forecast that milk prices would average US$17.70-$18.40 a hundredweight this year, a rise of up to 13%.

 

The figure was also above a preliminary, so-called "baseline", forecast of US$16.40 a hundredweight revealed by the USDA last week.

 

Cash prices for steers would set a record, reaching up to US$109 a hundredweight, an increase of 15%, and above a baseline estimate of just under US$100 a hundredweight.

 

"Livestock prices are expected to remain strong and further improvement in milk prices is likely," Glauber told the USDA's Outlook Forum, noting firmer demand on both domestic and export markets.

 

However, higher feed costs, as growers struggle to replenish grain stocks, meant would depress margins for livestock  and dairy farmers at "low levels".

 

"While milk prices are forecast to be higher in 2011, increasing feed costs could continue to put financial pressure on dairy producers, especially those producers that purchase feed at current price levels," Glauber said.

 

Poultry farmers were already suffering, to judge by a fall from 5.5% to 0.8% in less than two months in the growth rate in the numbers of chicks placed for feeding up.

 

"This abrupt slowdown is likely the result of sharp increases in feed prices, especially coming at a time when wholesale prices for many broiler products have been declining," he said.

 

Indeed, the USDA forecast a potential easing off in broiler prices from last year's average of 83 cents a pound, rather than the baseline forecast of an increase to 86 cents a pound.

 

The comments came as poultry giant Sanderson Farms revealed a return to first-quarter loss, and delayed plans for a processing factory in North Carolina.

 

On Chicago livestock markets, live cattle for April stood 0.2% higher at 113.85 cents a pound in late deals, with March feeder cattle up 0.2% at 129.43 cents a pound, and lean hogs for April up 0.3% at 89.78 cents a pound.