February 22, 2008

US meat production declines on high feed costs

The USDA recently reported that production of all meats slows in the first half of the projection period, due to higher feed costs as more corn is contested for ethanol production.

Distiller's grains, which can be used in livestock rations, partially substitutes for corn and sometimes for soymeal.

However, distiller's grains can more easily be used by ruminants compared to hogs and chickens.

Beef cattle feedlots close to ethanol plants are best situated to benefit from a steady supply of distiller's grains, also reflecting the ability of those animals to use the wet form of distiller's grains.

Higher grain prices and drought in recent years push down cattle inventories, lowering US beef production in 2008-10, the report said. 

Production is expected to rise in the remainder of the projection period as returns improve and herds are rebuilt.

The cattle inventory remains in a range of 96-99 million head throughout the projections.

Meanwhile, pork production slows in 2009-11 on higher feed prices. For the remainder of the projections, pork output was anticipated to grow as higher hog prices improve returns.

Poultry production was also estimated to decline in 2009-13 while adjusting to higher feed costs, but begins to rise towards the end of the projections period. During the period, rising exports account for a larger share of total production, the USDA said.