December 21, 2005

USDA: US milk production surge overcomes demand growth
 

US dairy in the second half of 2005 developed much as expected. The strong returns of the last 2 years unleashed large increases in milk production. These jumps outstripped expansion in dairy demand and eroded milk and dairy product prices.

Cattle and beef markets are gearing up for the winter holiday season and continue to react as Japan and the United States work out details for resuming Japanese imports of U.S. beef. Feedlots continue to move cattle at strong prices as disappointing grading conditions continue.

Hog slaughter and pork production typically achieve annual highs in the fourth quarter of each year, while hog prices registered annual lows. The current market situation reflects typical seasonal patterns. Pork production in the fourth quarter is expected to be about 5.6 billion pounds, or about 2 percent more than a year ago.

In the US poultry market, an uncertain export market situation, rising stocks and an increase in production in October has placed downward pressure on most broiler prices. Cold storage holdings for the end of the third quarter were revised upward by 18 million pounds, and broiler meat production was 5 percent in October.

For the full USDA report, click here.