July 7, 2009

Midway through 2009, US market observers note that reductions in meat production have been leveling off, which could be a troubling development, according to a report from the Chicago Mercantile Exchange (CME).

Through the week ending June 27, 24.2 billion pounds of red meat has been produced, which is a 1.9-percent drop from the same period in 2008.

According to CME, beef production remains down about 2.3 percent for the year, while pork production is off by 1.7 percent.

However, weekly red meat totals have been closer to year-ago levels since mid-May and red meat output has been significantly higher than the average for the period from 2003 through 2007.

Pork production is pushing the numbers higher in the trend with output 12-percent higher than the 2003-2007 average. Beef production is 2.9-percent larger than the long-term average.

That rising pork number has been hit with fewer Canadian pigs in the market and a smaller breeding herd. That shows the productivity increases the industry is hitting, but that could also put a lot of economic pressure on pork producers.

Operating losses in both the beef and pork sectors still point to needed output reductions if profits are to return, even with lower grain prices.

Poultry numbers show that output is about 6.1-percent lower than last year, but production there is also creeping back up.