December 27, 2006

USDA: Higher beef production; broiler exports down in October

Increased ethanol production and the corresponding increase in prices of corn are driving feed and forage prices higher, says the USDA.

These factors, coupled with large feedlot inventories, continued heavy cow slaughter, and slower-than-anticipated increases in beef exports, are keeping beef production higher than 2005 levels, with a corresponding decline in cattle and beef prices.

Continued strong demand for dairy products, both international and domestic, will combine with marginally higher 2007 production to boost prices throughout the dairy complex, say the department.

Although the daily slaughter reports show continued growth in average bird weights, the drop in the number of chicks placed for growout, points toward little or no rise in broiler meat produced in Q4 2006 and into Q1 2007. A combination of low broiler product prices in H2 2006 and rising feed costs is expected to result in a slight decline in broiler production during H1 2007, to about 18 billion pounds.

For almost all of 2006, prices for broiler products have been below their year-earlier levels. However, over the next several months the forecast of little or no growth in production and lower stock levels is expected to push prices above their year-earlier levels.

The USDA also reported that for October broiler exports, the first month of the fourth quarter totalled 444 million pounds, down 9 percent from a year ago. The decline is largely attributed to the exceptionally strong October 2005 broiler exports that occurred when shipments resumed after trade disruptions related to Hurricane Katrina.

The Q4 2006 broiler export forecast was lowered by 60 million pounds, however, as lower-than-expected shipments in the Q3 implied potentially weaker exports through the remainder of the year and into 2007. Broiler export projections for 2007 were lowered 125 million pounds to 5.4 billion pounds. But shipments for next year are still expected to be more than 3 percent ahead of the 2006 forecast.

Turkey exports increased initially on account of strong growth in exports to Russia and China.

For the full USDA report, please click here