July 19, 2010

US cattle and hog prices forecast lower on output changes

Average US cattle and hog price forecasts for 2010 were revised down recently due to changes in forecast US beef and pork production, although prices are still expected to remain above year ago levels.
 

The recently released USDA World Agricultural Supply and Demand Estimates report saw a slight upward revision in US beef production for 2010, due in part to higher cow slaughter so far this year and an increase in cattle placements into US feedlots over the past couple of months. However, US beef production for 2010 is expected to be 1% below 2009, at 11.69 million tonnes cwt (25.768 billion lbs).

Given tighter meat supplies, higher exports and some improvement in US meat demand, average US steer prices for 2010 are forecast to jump 12% on 2009.

The forecast for 2010 US pork production was also raised slightly, to 10.1 million tonnes cwt (22.269 billion lbs), although 3% below 2009. Higher slaughter and heavier carcase weights during the second quarter was the premise for USDA's revision. Despite recent increases in supply, US hog prices for 2010 are still predicted to jump 33%.

Contrary to beef and pork, 2010 US broiler production is predicted to increase 3% on 2009 volumes, as lower feed costs push bird weights and numbers up.

While it would be expected that higher production would translate to cheaper chicken, USDA is forecasting average US broiler prices to rise 8% in 2010. This is due to lower beef and pork production, and an expected boost in US poultry exports for the rest of the year, due to a resumption of exports to Russia.