March 11, 2010

USDA lowers 2010 meat output; beef imports down slightly

In its latest monthly supply-demand outlook report, the USDA lowered slightly its projections for 2010 red meat output and reduced its estimate for beef imports.

The latest data for March 1 showed a 90.0 million-pound reduction in projected pork production for the year to 22.450 billion pounds. USDA said smaller-than-expected slaughters during January and February along with lighter carcass weights led to the lower output expectations for the year. The reduction amounted to 0.4%.

In the beef sector, USDA's downward revision in production was just 5.0 million pounds on lighter carcass weights but the department also lowered its estimate for beef imports by 75.0 million, resulting in a drop in total supplies of nearly 80 million pounds.

While the downward revisions were small, an analyst said that "these adjustments would not hurt prices any and can only be supportive, but also may be already priced into the market." The weekly livestock slaughter and meat production data have been showing the effects of lighter carcass weights, he said.

USDA did not adjust its projections for beef and pork exports as of March. The department's economists said, "Although the recent resolution of pork sanitary issues will permit exports to Russia, exports to that market will be limited by import quotas."

Meanwhile, 2010 price forecasts for cattle, hogs and poultry were increased slightly. USDA cited tighter meat supply forecasts. The annual price forecast for cattle was increased by US$1 to US$2 per hundred pounds on a live weight basis and hogs upward by US$1 from the previous month projections.