January 24, 2006

 

USDA: Production of poultry and hogs up

 

 

Poultry

 

USDA, in its January Livestock, Dairy and Poultry Outlook said the production estimate for Q4 2005 was increased by 45,000 tonnes to 3.85 million tonnes due to  increases in the number of broilers slaughtered. This resulted in the annual estimate for 2005 being raised to 16.01 million tonnes, a 3.6-percent increase from the previous year.

 

Domestic prices fell for most broiler products as there were more domestic production and weaker exports, causing stocks to pile up. At the end of November, broiler products in cold storage were estimated at 390,000 tonnes, an increase of 13.5 percent over the previous year.

 

A rise in cold storage holdings caused Q4 ending stocks estimates to increase to 380,000 tonnes. Sizeable increases were made for quarterly ending stocks estimates for 2006, said USDA.

 

The report said estimates for Q4 exports were reduced by 56,000 tonnes to 610,000 tonnes as several countries in Europe and Asia reduced their purchases of broiler meat. The threat of bird flu and high leg-quarter prices are two likely reasons for the reduction.

 

 

Cattle/Beef

 

The latest USDA report said herd expansion is likely to be continuing, and that higher total inventory numbers are to be expected.

 

Herd rebuilding remains highly probable with beef supplies being tight, and the reopening of the Japanese market for higher quality fed beef in December 2005. The recent announcement of the reopening of the South Korean market, which accounted for nearly 25 percent of pre-BSE exports, will likely increase demand for US beef.

 

USDA predicted that it will take several years to regain pre-BSE levels of US beef exports. However, exports are like to increase as herd expansion continues and more cattle are age-verified. Prices of choice and prime beef will be kept high by present age restrictions and strong domestic demand.

 

The opening of the Japanese and South Korean markets will intensify the problem of unusually tight supplies of choice cattle this time of the year. This will cause fed cattle prices to remain firm. Fed cattle prices are currently in the mid-US$90 range.

 

 

Hogs/ Pork

 

USDA said the US pork sector is projected to produce more than 4.5 million tonnes of pork in the first half of 2006, and about 4.9 million tonnes in the second half. This will make for a record high total in 2006 of over 9.5 million tonnes, or 2.4 percent over 2005.

 

December 1 breeding herd inventories were reported by producers to be 1 percent more than the previous year. Producers displayed restraint with modest increases in breeding herd numbers.

 

According to the latest report, US imports of Canadian swine are expected to increase this year.  US feeder pig finishers are projected to import 8.7 million animals this year. Out of this, more than two-thirds are expected to be feeder pigs. USDA expects year-on-year increases in the middle quarters of 2006, largely due to Canada's imposing of dumping penalties and countervailing duties on US corn imports.

 

US exporters are expected to ship almost 1.2 million tonnes of pork to foreign markets in 2006, up 3.6 percent over 2005. The report said the US will likely rank as the second-largest pork exporter in the world, after the EU in 2005. For that year, US exporters shipped about 40 percent of its pork to Japan.

 

Japan's imports of pork has risen significantly since Japan banned US beef in December 2003, as Japanese consumers substituted pork for beef. Now that Japan has reopened to US beef, Japanese consumers are likely to demand less pork. 

For the full USDA report, click here.