May 16, 2009

US beef output to fall in 2010; beef production down this year

US beef production in 2010 will be lower than this year, while the forecast for beef output this year has been revised, according to the USDA's World Agricultural Supply and Demand Estimates.

Beef production 2009 has been revised down 0.1 percent to 12.08 million tonnes cwt, due to heavier-than-expected steer and heifer weights and higher cow slaughter driven by the culling of dairy cows.

Further falls are expected for 2010 due to tighter cattle supplies, with beef production seen to drop two percent to 11.84 million tonnes cwt. Tighter cattle supplies are caused by expectations that producers will begin rebuilding herds after two years of liquidation. A small calf crop is also projected for 2009, further reducing supplies in 2010.

With domestic production seen to decrease, US beef imports in 2010 are expected to increase five percent on 2009 levels to 1.35 million tonnes cwt. US beef exports are also projected to increase 10 percent in 2010 to 864,093 tonnes cwt.

With the fall in production and increase in exports, overall US beef supply is expected to shrink, which will boost beef and cattle prices. This would relieve US cattle producers who have experienced lower cattle prices this year due to the recession and a larger number of cattle grading Choice. The USDA projected Choice steer prices for the first quarter of 2010 to increase about nine percent on-year.

Projected declines in beef and pork production are expected to be offset by a forecasted rise in poultry production. Poultry producers are expected to respond to improved financial returns by increasing egg set production in the second half of 2009.

Meanwhile, USDA has revised its 2009 US meat production forecasts slightly higher to 41.28 million tonnes cwt, but this volume is still three-percent lower than last year. The revision was mainly driven by higher-than-expected beef and broiler production, offsetting lower pork and turkey production.