March 17, 2008

Record grain costs to weaken US meat production

The USDA said that the US beef, pork and chicken production would decline as high production costs become a constant issue in the market until 2011.

US cattle herd would hover between 96-99 million head as high feed and production costs cut down red meat supplies, the USDA said.

The department said that skyrocketing feed and input costs are largely due to the use of crop in biofuels.

USDA explained that high production costs would eventually be passed on to higher retail and farm gate prices for meat and livestock, which would in turn encourage production growth.

With steadily rising carcass weights, beef production is estimated to increase 6 percent between 2010 and 2017, to match the record in 2006.

US cattle prices are anticipated to fall from recent record levels in 2008, before again rising gradually through to 2017.

Hog prices are also forecast to fall 4 percent in 2008, before rising 25 percent by 2017 on high production costs.

Broiler prices are forecast to rise 14 percent by 2017.

Overall, US import is expected to grow, benefiting Australian exporters. US beef imports are forecast to reach 1.7 million tonnes cwt by 2017, an increase of 19 percent on 2007 volumes, which was at 1.47 million tonnes cwt.