November 11, 2011

USDA cuts 2012 forecasts for red meat and poultry production 

USDA lowered its 2012 forecast for total red meat and poultry production from last month by reducing beef production due to slightly lower cattle slaughter and slower growth in carcass weights.

Broiler production was forecast lower on expected sharper declines in bird numbers during late 2011 and into 2012, USDA said in its monthly World Supply and Demand Estimates report. The outlook for pork production was unchanged.

Beef export forecasts were raised slightly for both 2011 and 2012 on continued strong global demand especially from Asian markets. The pork export projection for 2011 had little change, but broiler exports were estimated higher for both 2011 and 2012 due to strong demand and a relatively weak dollar.

Cattle prices were forecast higher for the remainder of 2011 and through 2012, with strong demand expected to carry into next year along with tight cattle supplies. Hog prices were raised for 2011 and 2012, also on strong demand strength, with support from lower beef and broiler production.

Broiler prices were lowered for the last quarter of 2011 and the first quarter of 2012, with USDA citing weakness in domestic demand and overhanging supply pressure.

"Soft chicken pricing trends should encourage further production cuts," said Deutsche Bank analyst, Christina McGlone, in a note to clients.