October 23, 2006

 

US pork production to expand while corn crops to drop in 2007

 

 

US pork production is expected to increase while corn crops are expected to decline in 2007, according to USDA's Livestock, Dairy, and Poultry Outlook released Thursday (19 Oct).

 

US corn production for 2006 was forecast at 10.9 billion bushels in the October Crop Production report, down from the September forecast of 11.1 billion bushels.

 

Corn prices are expected to rise next year and farm prices are expected to range between US$2.40 and US$2.80 per bushel.

 

The Quarterly Hogs and Pigs report released by USDA in late September showed the September 1st inventory of breeding animals to be almost 2 percent larger than at the same time last year as producers enjoy an extended period of positive returns. 

 

The USDA also predicted larger pork supplies in 2007 would most likely pressure hog prices next year.

 

Prices for 51- to 52-percent live-equivalent hogs in 2007 are expected to range between US$40 and US$43 per hundredweight (cwt) and producers can expect positive returns through 2007, USDA said. The strongest positive returns can be seen in the summer and the weakest in the fall.

 

Total US pork exports for 2006 are expected to be 2.97 billion pounds, 11 percent above the total for 2005. For 2007, exports are expected to be about 3.10 billion pounds, or 4 percent above expected exports this year, the lower increase representing market adjustment to disease issues and outbreaks.

 

The US breeding herd has increased only slightly in the past one year.  The modest increase, suggests that most of the increase are made by medium- and smaller-sized operations. Large operations appear to be focused on acquisition of existing operations. For example, Smithfield Foods's recent announcement of its intention to purchase Premium Standard Farms, Inc.

 

US commercial pork production is expected to be 21.9 billion pounds in 2007, about 3.9 percent higher than production this year. The 2007 forecast reflects higher breeding herd numbers, farrowing intentions, and litter rates. The number of live Canadian swine to be imported by US finishers and packers in 2007 are also expected to increase.

 

In the US, larger pork supplies are expected to boost consumption. Retail pork prices would likely average in the mid-US$2.70s per pound next year, down from the low-US$2.80s per pound average anticipated for 2006.

 

Feeder and fed cattle prices continue at relatively high levels despite large inventories of cattle on feed.

 

For August, broiler exports totaled 423 million pounds, a year-over-year decline of almost 21 percent from the very strong exports of last August.

 

With broiler meat production growth slowing down, the estimates for the quarterly ending stocks for the third and fourth quarters of 2006 were reduced.

 

Overall, broiler meat exports in 2006 are expected to be 4 percent higher than in 2005.

 

Exports of nonfat dry milk (NDM) and skim milk powders (SMP) have been growing since 2004 due to increased international demand, favourable changes in US and European Union policies and a weakened US dollar.

 

Soybean production is forecast record large, up 3 percent from the September forecast and up 4 percent from the 2005/06 crop. Soybean meal prices are expected to average $147.50 to $177.50 per ton, down from $174.17 in 2006/06 and $182.89 2 years ago.

 

Dry conditions in many areas forced hay feeding this past summer. Thus, hay supplies are likely to be fairly tight and expensive for this winter.

 

Hay production was forecast at 147 million tonnes this year, down 2.4 percent from last year. May 1 hay stocks were down 23 percent ,from a year earlier,

 

At the same time, hay production was forecast at 147 million tonnes this year, down 2.4 percent from last year.

 

For the full report, please click here