July 10, 2010

 

US further cuts hog and cattle price forecasts

 
 

The USDA cut its hog and cattle price forecasts for the second consecutive month amid rising production and slower demand.

 

Hogs are expected to average US$54-56 per hundredweight live, compared with a June estimate of US$54-57, the USDA said. In 2009, slaughter-ready hogs averaged US$41.24.

 

Slaughter-ready steers are expected to average US$92-95 per hundred pounds during 2010, down from a June estimate of US$92-96, the USDA said in its monthly supply and demand report. The revised estimate is still up from an average of US$83.25 in 2009.

 
Price prospects for cattle and hog markets have eroded as demand remains relatively weak in the face of higher production, the USDA said.

 

Meanwhile, the USDA also raised its forecast for 2010 US milk production for the 12th straight month, to a record 191.2 billion pounds, while trimming estimated milk prices. Corn prices are expected to be higher than previously estimated on stronger feed demand and a smaller harvest outlook.

 

Cattle and hog prices have tumbled from multiyear highs this spring as the struggling economy and high unemployment fueled doubts whether consumers will pay for steaks and other higher-priced food.

 

August live cattle futures in Chicago yesterday settled at 90.9 cents a pound, down from a life-of-contract high of 95.55 cents May 11.

 

Softening prices come as beef and pork production appears to be ramping up. US beef production is expected to total 25.77 billion pounds in 2010, up 0.6% from a June estimate, though down 1.2% from 2009, according to reports.

 

Pork production was hiked to 22.27 billion pounds, up 0.6% from a June forecast but down 3.3% from 2009.

 

Rising beef production in part reflects "relatively high" cow slaughter this year, the USDA said. Additionally, higher feedlot placements during the middle of this year are expected to boost steer and heifer slaughter later in the year and into early 2011, the USDA said.

 

For pork, production is forecast higher for 2010 based on increased slaughter and heavier dressed weights, mainly during the second quarter, the USDA said.

 

Stronger export markets have underpinned cattle and beef markets. Projected US beef exports were raised to 2.09 billion pounds, up 1.5% from a June estimate and up 12% from 2009, the USDA said. Pork exports in 2010 were unchanged at 4.33 billion pounds, up 4.8% from 2009.

 

Livestock producers should expect to pay more for corn this year as a smaller harvest outlook may lead to reduced supplies, based on reports.

 

Meanwhile, the USDA lowered its 2010 corn production estimate to 13.245 billion bushels from a previous forecast of 13.37 billion bushels, reflecting lower planted acreage. Projected corn stocks at the end of the 2010-11 marketing year were trimmed 200 million bushels, to 1.373 billion bushels.

 

Corn prices are expected to average US$3.45-4.05 a bushel in 2010-2011, up from a previous estimate of US$3.30-3.90.