April 17, 2006

US meat supplies expanding this year

Prices for beef are falling due to excess supplies of all meat and record inventories of cattle on feed.

Fed cattle prices are now below breakeven and slaughter is slightly ahead of last year's levels while dressed weights remain well above last year's levels and the 5-year average. Beef production is predicted at 5 percent over year-earlier levels and above the 5-year average.

While fears of bird flu are fuelling uncertainties concerning price trends, producers are basing their production plans based on how Europe coped with the disease. However, consumption trends show a conflict between different regions.

Bird flu has resulted in decreased consumption leading to price falls and build-up of poultry stocks in southern Europe.

Also, in Western Europe, bird flu has resulted in decreased exports which resulted in excess stocks, leading to decreased prices.

In central Europe, bird flu fears are on the wane and consumers are now taking advantage of reduced poultry prices, leading to increased consumption instead.

Analysts say the usually pragmatic Americans would likely continue to buy into poultry even if there is an outbreak as they are assured of the safety of eating cooked poultry. Furthermore, reduced prices in the event of an outbreak will add further impetus to consumers to favour poultry, prompting decreased pork consumption, analysts said.

US pork exports set new records this year, up at least 20 percent on-year for the first two months of this year.