USDA Livestock, Dairy and Poultry Outlook
19 June 2012
Higher Average Dressed Weights Offset Slight Slaughter Reduction in Second Quarter
USDA lowered second-quarter commercial production slightly, based on lower than expected weekly kill numbers. Small reductions in weekly slaughter could be a packer response to recent weak margins but could also reflect tighter hog supplies. However, higher estimated dressed weights largely offset lower slaughter numbers. The upcoming Hogs and Pigs Report, to be released June 29th, will provide further information on hog supplies. Second-quarter 2012 commercial pork production is expected to be 5.5 billion pounds, 3.3 percent ahead of the same period last year. For 2012, the U.S. pork sector is expected to slaughter almost 2 percent more hogs, at higher dressed weights than last year. Both of these factors contribute to a 2012 commercial pork production forecast of 23.4 billion pounds, almost 2.7 percent above production in 2011. Second-quarter average prices for live equivalent 51-52 percent lean hogs are expected to be $59-$60, almost 14 percent below the same time last year. For 2012, the expected average hog price is $59-$61 per cwt, almost 9 percent below 2011.
Pork Exports Solid in April
U.S. pork exports in April were 451 million pounds, almost 7 percent higher than a year ago. The 10 largest destination countries in for U.S. pork are listed below.
Continued strong Mexican demand for U.S. pork likely reflects the tight Mexican feed grains balance sheet. In the case of Russia, continued trade disputes with Brazil are likely a factor driving Russian demand for U.S. pork. Chinese imports of U.S. pork products in April were almost three times higher than a year ago. Assuming that Chinese orders for U.S. pork placed in fall 2011 were shipped by the end of first-quarter 2012, it appears that China is maintaining a more pronounced profile in the U.S. pork market than in the past several years. After the first half of 2008, when China had taken delivery of a large set of purchases, its demand for U.S. pork fell dramatically and persisted at very low levels until mid-2010. Given the volume of recent purchases however, Chinese imports of U.S. pork appear to have stabilized at a much higher level than in the past.
Monthly US Pork Exports to China, January 2007-April, 2012
Cattle and Beef Prices May Have Reached a Temporary Peak
Dry conditions are spreading to the North and West and expanding in the
Southeastern United States, causing consternation among crop and livestock
producers as far north as the Corn Belt and increasing the flow of lighter cattle off
pastures. Drought-induced feeder cattle exports from Mexico are entering the
United States at a higher rate than they were at this point in 2011. Although well
below 2011 levels year-over-year, weekly estimates of federally inspected other
(beef) cow slaughter have also increased from mid-April lows.
While yearling and fed cattle markets have been steady-to-higher in recent weeks despite negative cash margins for cattle feeders, prices/markets for lighter and younger calves are becoming unsteady at best, reflecting the rapidly deteriorating summer pasture conditions. Cow prices have also begun to slip somewhat as postcalving- season culling gets under way and pasture and hay conditions deteriorate.
Projected cattle feeding costs through August 2012 range from the low $130s per cwt to the low $140s. At current fed cattle prices, these costs indicate margins that are well into negative territory, with projected losses of over $200 per head (High Plains Cattle Feeding http://www.ers.usda.gov/publications/ldp/LDPTables.htm).
Wholesale Choice beef cutout values have again increased, approaching previous record levels of almost $200 per cwt. However, prices for 50-percent lean beef are again approaching the low levels reached just after the publicity concerning Lean Finely Textured Beef, and AMS-reported weekly 5-day moving average byproduct values have slipped by more than 5 percent since early May. Processing beef prices also may have reached a temporary peak and could decline over the next quarter, although the longer term outlook for all beef remains positive due to declining inventories and prospects for lower feed grain prices this fall.
Lower Beef Exports and Higher Imports Thus Far in 2012
U.S. beef exports through April were 11 percent below year-earlier levels as
quantities shipped to most U.S. trading partners have declined. Exports to Japan,
Canada, and Mexico through April were 7, 6, and 9 percent lower year-over-year.
Exports to South Korea and Hong Kong were 32 and 18 percent lower year-overyear.
A tighter U.S. beef supply and a relatively stronger U.S. dollar than in most
of 2011 have largely been behind the export reductions to date. Export levels to
Egypt and Vietnam, however, were 19 and 40 percent higher through the same
period. U.S. beef exports for 2012 are forecast at 2.6 billion pounds and are
expected to be 1 percent higher in 2013.
U.S. beef imports through April 2012 were 22 percent higher than year-earlier levels. Year-over-year imports from Australia through April were 74 percent higher, while imports from New Zealand and Canada have demonstrated only moderate growth of 3 and 9 percent. Although much smaller quantities of beef are imported from Mexico and Uruguay, the percentage growth year-over-year from these two countries is 37 and 43 percent, respectively. U.S. beef imports for 2012 are forecast at 2.4 billion pounds and are expected to be 7 percent higher in 2013 at 2.6 billion pounds.
Broiler Meat Production Up in April
Total broiler meat production in April 2012 was 2.99 billion pounds, an increase of
0.7 percent from the previous year. Broiler meat production has been mixed in
2012, with higher production in February and April and lower production in
January and March. Processors reported slaughtering 683 million broilers in April,
a decrease of 0.5 percent from the previous year. Offsetting this decrease in the
number of birds slaughtered was an increase in the average broiler liveweight at
slaughter to 5.84 pounds, 1.4 percent higher than the previous year. The average
meat yield per bird was 4.38 pounds, up 1.2 percent from a year earlier.
The broiler meat production estimates for both the second and third quarters of 2012 were revised upward as the decline in eggs set diminishes and weights continue to increase. The estimate for the second quarter was increased by 200 million pounds to 9.3 billion, and the third-quarter estimate was increased by 100 million pounds, also to 9.3 billion. With these changes and a small adjustment to the first-quarter production, the estimate for 2012 was increased to 36.89 billion pounds, down slightly (0.8 percent) from 2011. The increases in broiler meat production in the second and third quarters are expected to come from a combination of a higher number of birds slaughtered than originally expected and higher average weights.
The number of broiler chicks being placed for growout continues to be lower than the previous year. Over the last 5 weeks (May 5 to June 2, 2011), the average number of chicks placed per week was 166 million, down 3.6 percent from the same period in 2011. This level of chick placements, along with a slightly higher numbers of eggs placed in incubators—although still down 3.0 percent compared with a year earlier—is expected to result in slightly higher broiler meat production in third-quarter 2012 than originally forecast.
Broiler stocks at the end of April totaled 577 million pounds, down 18 percent from the previous year but 30 million pounds above March. Ending stocks for firstquarter 2011 were revised lower by about 2 million pounds to 547 million pounds, 17 percent below a year earlier. Lower broiler meat production in the second half of 2011 and through the first quarter of 2012, along with strong exports, resulted in falling stock levels. Broiler stock levels are expected to increase somewhat in the coming months to accommodate increases in production estimates. The forecasts for the second-, third-, and fourth-quarter 2012 ending stocks were all increased by 25 million pounds. Even with these increases, ending stocks are expected to be below the previous year until fourth-quarter 2012.
At the end of April, broiler stocks were down in all the categories reported in the Cold Storage report. Stocks of whole birds were reported at 15.1 million pounds, down 28 percent from the previous year, and the amount of breast meat in cold storage was down 18 percent from the previous year. The largest percentage change was for wings, down 47 percent from a year earlier. Stocks of thigh meat, however, were only slightly lower than at the end of April 2011.
With lower production and stock levels in the second half of 2011 carrying over into 2012, wholesale prices for most broiler products rose. However, prices for many products peaked a week or 2 before Memorial Day and have declined since then. During May, prices for broiler products were higher than the previous year, but the difference was smaller than at the start of 2012. The May price for boneless/skinless breast meat in the Northeast market, $1.45 per pound, was 11 percent higher than the previous year, but this year-over-year difference is lower than the January price difference of 16 percent. Prices for leg quarters averaged $0.53 per pound in May, 7 percent above a year earlier but strongly lower than the January year-over-year difference of 49 percent. One of the few products not following this pattern is broiler wings. In January 2012, wholesale prices for broiler wings were 69 percent higher than the previous year. However, wing prices have not followed their normal seasonal pattern of peaking in early February and then declining. By May, wing prices had only fallen by 7 cents per pound from their January peak and were 120 percent higher than in May 2011. With the upward revisions in production and stocks, most broiler prices are expected to be under some downward price pressure in the coming months.
Turkey Production Higher in April
Turkey meat production in April was 478 million pounds, up 4.9 percent from a
year earlier. Production was boosted by an increase in the number of birds
slaughtered, and as with broilers, there was also an increase in average bird weights.
In April, the number of birds slaughtered was 19.8 million, 3.8 percent higher than a
year earlier, with the average liveweight at slaughter up slightly (0.7 percent) to
30.18 pounds. Turkey meat production for second-quarter 2012 is expected to total
just over 1.5 billion pounds, up 4 almost percent from the previous year, and is
expected to remain above the previous year through the end of 2012.
Turkey hatchery data show that the number of poults placed for growout has been higher over the first 4 months of 2012, totaling 95.3 million, 4 percent higher than in the same period in 2011. In April, the growth in poult placements was not as strong: 23.8 million, only 2 percent higher than a year earlier. Given these increases, the second-quarter estimate for turkey meat production was raised by 25 million pounds to 1.53 billion, almost 4 percent higher than the previous year. The estimate for all of 2012 is just over 6 billion pounds, also an increase of almost 4- percent from 2011.
With higher turkey meat production in first-quarter 2012, cold storage holdings of turkey expanded to 375 million pounds, 15 percent higher than the previous year. This pattern has continued in April, with turkey stocks at the end of the month totaling 439 million pounds, up 20 percent from April 2011. Stocks of whole birds accounted for just under 50 percent of the total, 207 million pounds, and were up 14 percent from a year earlier. The remaining 232 million pounds were turkey parts, which were 27 percent higher than the previous year. With turkey production expected to be above the previous year through fourth-quarter 2012, turkey endingstocks estimates were increased for the second quarter by 25 million pounds to 575 million pounds and for the fourth quarter by 25 million pounds to 250 million pounds.
With higher production and stocks, prices for turkey parts have been under some downward pressure. In May, prices for most turkey parts were down from the previous year, and many had declined considerably from the beginning of the year. While prices for turkey parts have been declining, prices for whole birds continue to be higher than the previous year. May prices for frozen whole hens averaged $1.08 per pound, 8 percent higher than a year earlier. Prices for frozen whole hens are expected to remain above earlier levels through the end of 2012.
In May, the weekly average wholesale price for turkey breasts was approximately $1.30 per pound, about even with prices a year earlier. However, weekly drumstick prices in May 2012 were around $0.68 per pound compared with $0.81 per pound a year earlier, a decrease of 16 percent. Prices on a year-over-year basis were also lower for turkey wings (full cut) and boneless/skinless breast meat, down approximately 34 and 28 percent.
Egg Production Slightly Higher in April 2012
During January to April 2012, the number of hens in the U.S. table egg flock
averaged slightly higher than during the same period in 2011. In April, the flock
was estimated at 284 million birds, up less than 1 percent from the previous year.
This small increase in flock size was mostly offset by a small decrease in the rate of
lay for table egg birds in April, resulting in an increase in the number of table eggs
produced in April of only 0.1 percent (545 million dozen).
The shell egg production estimates for the second and fourth quarters were adjusted slightly. The estimate for second-quarter 2012 was decreased by 10 million dozen to 1.64 billion dozen, a total only slightly higher than in second-quarter 2011. The estimate for fourth–quarter 2012 was increased by 10 million dozen to 1.7 billion, again only a small change from the previous year. These changes leave total 2012 production at 6.64 billion dozen, less than 1 percent higher than in 2011.
Over the first 4 months of 2012, production of hatching eggs totaled 344 million dozen, down 3 percent as a result of lower broiler production. Production of broiler-type eggs was down 4 percent but was partially offset by an increase of 5 percent in the production of egg-type hatching eggs. Total hatching egg production for 2012 is expected to be 1.05 billion dozen, down 2 percent from 2011.
The seasonal decline in shell egg prices following the Easter holiday has not been as large this year as in past years. Prices in the New York market averaged $1.02 per dozen in April since Easter was early in the month. While weekly prices declined during May, the monthly average was around $0.92 per dozen, down about 4 cents from the previous year. In early June, weekly prices had risen to about $1.05 per dozen. The expected price for second-quarter 2012 is $0.98-$0.99 per dozen. Wholesale egg prices are expected to increase slightly in the third quarter but then to strengthen seasonally to average $1.10-$1.20 in fourth-quarter 2012.
Egg and Egg Product Exports Fall in April
With relatively strong domestic prices, egg exports continued lower in April,
totaling 24.3 million dozen, down 1.7 percent from the previous year. Over the first
4 months of 2012, egg exports totaled 87.3 million dozen, down 5 percent from the
same period in 2011. Exports in April to the four largest markets (Canada, Hong
Kong, Japan, and Mexico) were mixed. In April, exports to Canada and Hong
Kong were up considerably (10 and 24 percent), while exports to Japan were down 59 percent and shipments to Mexico fell 4 percent. Exports of shell eggs, both for
hatching and consumption, totaled 10.2 million dozen, 9 percent lower than a year
earlier. Exports of egg products totaled the equivalent of 14.1 million dozen, an
increase of 4 percent from April 2011.
After reaching 63 million dozen in the first quarter, total exports of eggs and egg products are forecast at 65 million dozen in second-quarter 2012. The estimate for 2012 is 263 million dozen, down 5 percent from the previous year.
Broiler Shipments Up in April
The second quarter of 2012 started off with big broiler shipments in April, totaling 598 million pounds, 20 percent larger than last April. There were sizable differences in shipments to most of the U.S. major broiler markets compared with a year ago. Shipments to Mexico, the largest U.S. broiler market, were up almost 21 million pounds in April from a year earlier, while exports to Russia, the second largest U.S. market, increased 140 percent from a year ago. Shipments to other broiler markets such as Canada, Cuba, and Taiwan, also rose considerably over the same period: Canada by 42 percent, Cuba by 82 percent, and Taiwan by 81 percent. The key reason for this surge in broiler shipments is a strong international demand for U.S. broiler meat in spite of relatively high leg-quarter prices. Leg-quarter prices averaged 53.2 cents per pound in April compared with 46.8 cents per pound last year.
Turkey Shipments Continue Strong in April
Turkey shipments in April 2012 increased 22 percent from a year earlier. A total of 64 million pounds of turkey meat was shipped abroad. The primary reason for the increase in the turkey shipments is a healthy demand for U.S. turkey meat. Mexico accounted for over 51 percent (33 million pounds) of U.S. total turkey shipments. China, the second largest U.S. turkey market, increased its imports of U.S. turkey meat by 44 percent. Other major turkey destinations, such as Hong Kong and The Philippines, were not strong contributors to the U.S. expansion in turkey shipments. Of these two countries, Hong Kong had the larger increase from last year, 1.57 million pounds, while shipments to Philippines increased by 1.39 million pounds.
DOWNLOAD REPORT:- Download this report here