November 19, 2012

Following a 4% drop in beef output, US meat production will fall by 2% in 2013, as high feed prices discourage feeders.

In a monthly "outlook" report, USDA's Economic Research Service said on Friday (Nov 16) pork and broiler production each would fall by 1%. With smaller production, beef, pork and poultry exports wold fall slightly from this year's levels.

Red meat and poultry production for 2013 was estimated for 90.477 billion pounds, compared to 92.504 billion pounds this year, which is slightly lower than in 2011, said USDA.

Beef production was forecast to drop by 2% this year, partly due to high prices and tight grain supplies. Output would drop by 4%, to 24.5 billion pounds next year, said USDA.

"Cattle feeders' and beef packers' poor margins will likely continue until cattle and beef prices reach levels that generate positive margins for both sectors, or until grain prices decline to levels that make cattle feeding profitable enough for packers to achieve positive margins," said USDA.

Feeding margins are expected to tighten for hog farmers in 2013, which will encourage producers to ship animals to slaughter as soon as possible and at lower weights than initially expected, said USDA.

"Broiler integrators are not expected to have any incentive to expand production due to the combination of continued high prices for corn and soy meal and expected relatively modest growth in broiler prices," said USDA.