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USDA Livestock, Dairy and Poultry Outlook


15 February 2012

USDA Livestock, Dairy and Poultry Outlook - February 2012USDA Livestock, Dairy and Poultry Outlook - February 2012

U.S. exports were record high in 2011, at 5.2 billion pounds, driven largely by strong shipments to Asia. China was the third largest buyer of U.S. pork last year.
Livestock, Dairy and Poultry Outlook

Pork/Hogs Summary

Pork/Hogs Trade: U.S. exports were record high in 2011, at 5.2 billion pounds, driven largely by strong shipments to Asia. China was the third largest buyer of U.S. pork last year. Exports in 2012 are expected to be about the same as last year. U.S. imports in 2011 were 7 percent lower than a year earlier, and are expected to continue to decline— about 2 percent—in 2012. Total 2011 U.S. imports of live swine were less than one percent higher than a year ago. Live imports in 2012are expected to be near last year’s levels.

Hog/Pork Trade

Pork Exports Record-High in 2011

U.S. trade data released in carcass-weight volumes by USDA on Friday, February 10, 2012 showed December pork exports at 493 million pounds, 23 percent above a year earlier, mostly due to very large shipments to Asia—China in particular. Total exports for 2011 were 5.2 billion pounds, 23 percent above totals in 2010. The 10 largest foreign destinations for U.S. pork last year are shown below. Clearly, shipments to China pushed the U.S. 2011 export total into territory not heretofore seen. Chinese purchases of U.S. pork were a means used by China to tame pork price inflation which came about largely as a consequence of the Chinese pork sector’s serious, ongoing problems in controlling various lethal swine diseases. It is possible that the incidence of such diseases as FMD and PRRS will recede as Chinese pork production shifts from its current model, characterized by millions of small “backyard” operations, to a smaller number of larger, integrated, production units with stringent biosecurity and herd health programs in place. Such top-to-bottom structural transformation will be slow in coming however, given the scale of the task. Until then, it is likely that large pork exporters as the United States, Canada, the E.U., and Brazil will function as “safety valves” for China, implying the continued possibility high volume and price volatility as exporters adjust to Chinese presence—or absence—in international markets.



As in past years, Japan was the number 1 buyer of U.S. pork products in 2011. U.S. exports increased 15 percent, year-over-year. Japanese data indicate that total pork imports in 2011 increased by more than 5 percent. While Japanese purchases from major U.S. competitors—Canada and Denmark—declined in 2011, imports from the United States increased, according to the Japanese data. It is likely that the relatively low-valued US dollar exchange rate—vis-à-vis other competing pork exporting countries—was an important factor in increased U.S. volume shipments in 2011.

Although Mexico held its customary spot as the number 2 buyer of U.S. pork in 2011, its purchases of U.S. pork were flat compared to 2010, at just over1 billion pounds. This is a departure from past buying patterns when as recently as 2009, Mexico increased its share of U.S. exports. Slower than expected economic growth, a declining value of the peso since the third quarter of 2011, and larger imports of U.S. poultry may account for some of the slowdown in pork exports last year.

2011 Pork Imports Lower

The United States imported more than 803 million pounds of pork last year, a decrease of 7 percent from 2010. More than likely, lower exchange rate values throughout 2011 made pork from Canada—supplier of 79 percent of U.S. imports— less competitively priced than in the past. This year, the same variable- the U.S. dollar exchange rate, and increasing domestic supplies, will likely continue to limit U.S. pork imports. Total 2012 imports are expected to be almost 2 percent lower than last year.

Imports of live swine in 2011—almost all of which are of Canadian origin—were almost 1 percent above those of 2010, at 5.8 million head. The only category that showed gains relative to 2010 was that of early weaned pigs--animals weighing less than 15.4 pounds. Imports of early-weaned pigs were almost 12 greater than in 2010, likely reflecting strong demand in the United States that derived from strong U.S. hog prices.

USDA forecasts for 2012 pork exports and imports remained unchanged in February, at 5.1 billion pounds on the export side, and 785 million pounds on the import side. Exports are expected to be roughly the same as last year, while imports are likely to be about 2 percent lower than a year ago, given continued relative weakness in the U.S. exchange rate, and larger expected domestic pork availability this year. USDA will release the Quarterly Hogs and Pigs report on March 30th and the Livestock and Poultry: World Market and Trade on April 20, 2012.

Poultry Summary

Poultry: Broiler meat production in 2011 was 37.2 billion pounds, up 0.7 percent from the previous year. The outlook for 2012 is for decreases in production during the first three quarters, with rising production in the fourth quarter. Turkey meat production in 2012 is forecast at 5.86 billion pounds, up 1.1 percent from 2011. Turkey meat production is expected to decline slightly in first-quarter 2012, but then increase in the remaining three quarters. Table egg production is expected to increase slightly (0.5 percent) in 2012, reaching 6.64 billion dozen, up from 6.1 billion dozen in 2011.

Poultry Trade: Boiler shipments for December 2011 totaled 582 million pounds, a decrease of 6-percent from last year. December turkey shipments totaled 71 million pounds, an increase of 18-percent from December 2010. Broiler shipments were down in the fourth-quarter of 2011 from a year earlier, while turkey shipments were up. Broiler shipments for the fourth-quarter of 2011 totaled 1.878 billion pounds, down 4 -percent from 2010 fourth quarter. Turkey shipments totaled 199 million pounds for October, November, and December of 2011, up 14- percent from a year earlier.

Poultry

Broiler Meat Production Forecast at 36.1 Billion Pounds in 2012

The outlook for broiler meat production in 2012 is for relatively sharp year-over-year declines during the first three quarters of the year followed by an increase in the fourth quarter. The estimate for 2012 broiler meat production was reduced from the previous month by 400 million pounds to 36.1 billion pounds, down 3 percent from 2011. Most of the reduction is the result of lower expectations for broiler weights. For the first three quarters of 2011, average broiler weights had been sharply higher than the previous year but in the fourth quarter fell below the previous year. The combination of lower numbers of chicks being placed for growout and expected lower weights is the major factor in the reduced production estimate. Broiler product demand is also expected to be influenced by any improvement in the domestic economy and if unemployment rates decline. However, any expansion of broiler production will continue to be influenced by the outlook for feed costs.

For December 2011, broiler meat production was reported at 2.9 billion pounds, down 10 percent from a year earlier. The number of birds slaughtered decreased year-over-year by 9 percent and, additionally, the average liveweight at slaughter fell to 5.78 pounds, down 1 percent from December 2010. Broiler meat production in fourth-quarter 2011 totaled 8.9 billion pounds, down 6.6 percent from fourth-quarter 2010. The decrease was again due to both a decrease in the number of broilers being slaughtered (down 6 percent) and a decrease in the average liveweight at slaughter (down 0.7 percent). The average liveweight per bird at slaughter in fourth-quarter 2011 was 5.83 pounds. The fourth quarter was the only quarter where the average weight was less than the previous year.

Broiler meat in cold storage at the end of December 2011 totaled 591 million pounds, down 24 percent from the previous year and 49 million pounds less than at the end of the third quarter. With reduced broiler meat production during fourth-quarter 2011 and lower levels of production forecast to extend through the first three quarters of 2012, ending stocks are expected to remain below year-earlier levels through the first three quarters of 2012, then move slightly higher in the fourth quarter.

Cold storage holdings for almost all broiler products at the end of December were lower than the previous year. Most of the decline in stocks is the result of the sharp decline in broiler production during fourth-quarter 2011. The only exceptions were higher stocks for whole birds (up 1 percent), chicken feet (up 41 percent), and drumsticks (up 11 percent). Even stocks of breast meat were down 4 percent from the previous year. Breast meat stocks in the first 11 months of 2011 had averaged 34 percent higher than the previous year. Stocks of leg quarters totaled 79 million pounds, up 8 million pounds from the previous month, but still 32 percent lower than at the end of 2010. The continued low level of leg quarter stocks has been influenced by large fourth-quarter exports.

The declining level of cold storage broiler stocks has been reflected in increases in wholesale prices. In January 2012, prices for boneless/skinless breast meat in the Northeast market averaged $1.30 per pound, up 16 percent from the previous year and 4 cents per pound higher than the previous month. During 2011 prices for boneless/skinless breast meat had been lower than the previous year in 10 of the 12 months. Leg quarter prices in the Northeast market were also higher, averaging 53 cents per pound in January 2012 compared with only 35 cents per pound the previous year. Leg quarter prices were higher than the previous year for all but one month in 2011, partly as a result of a strong export market. Broiler meat exports in 2012 are forecast to be slightly higher than the large shipments in 2011. If exports remain strong, there will be upward pressure on leg quarter prices, considering lower beginning stocks and expected production declines. Overall prices for broiler meat products are expected to continue to gradually move higher in 2012 due to the influence of high prices for competing meats and lower levels of broiler production.

Turkey Meat Production Forecast Increased in 2012

Turkey meat production in 2012 is forecast to total 5.9 billion pounds, up 1 percent from 2011. The current forecast is an increase of 10 million pounds from the January forecast. If realized, this would be the second year in a row that production will increase after declining in both 2009 and 2010. Turkey meat production is expected to show a slight decline in first-quarter 2012, but then increase in the remaining three quarters of the year. The increased meat production is expected to arise from a larger number of birds slaughtered, as average liveweight at slaughter is expected to remain near year-earlier levels. Turkey producers, like other livestock producers, will continue to be influenced by the outlook for feed costs and the uncertainty over sustained growth in the domestic economy.

Turkeys slaughtered in 2011 numbered 247 million birds, 2 percent more than the previous year. This is a reversal from the previous 2 years, when the number of birds slaughtered decreased. Turkey meat production rose by 2.6 percent to 5.8 billion pounds in 2011. The higher number of turkeys slaughtered was a major portion of the increase, but the annual average liveweight at slaughter in 2011 was also higher at 29.4 pounds, an increase of 1.1 percent from the previous year.

Turkey meat production in fourth-quarter 2011 was 1.5 billion pounds, down less than 1 percent from the previous year after being higher on a year-over-year basis in the first three quarters. The production increases during the first three quarters of 2011 were a continuation of a strong production increase in the fourth quarter of 2010. The decrease in turkey meat production in fourth-quarter 2011 was due to a smaller number of turkeys slaughtered (down 0.6 percent), as the average liveweight of those birds at slaughter was basically the same as the previous year.

The increased turkey meat production in the first three quarters of 2011 has led to higher turkey cold storage holdings over all four quarters in 2011. At the end of December 2011, turkey cold storage holdings totaled 206 million pounds, up 7 percent from a year earlier. Stocks of whole birds and turkey parts were both higher compared with the previous year. Stocks of whole birds increased the most, rising to 52 million pounds, up 14 percent from the previous year. Stocks of other turkey meat products also increased, totaling 154 million pounds, 5 percent higher than the previous year. With turkey production expected to be lower in the first quarter, but higher in the remaining three quarters, turkey quarterly ending stocks are expected to remain slightly above year-earlier levels throughout 2012.

The national prices for frozen whole hen turkeys averaged 98.4 cents per pound in January 2012, an increase of 12 percent from January 2011, but about 8 cents lower than the previous month as prices seasonally decline in the first part of the year. With only slightly higher production expected during the first half of 2012 and relatively low beginning stocks of whole birds and other turkey meat, national prices for frozen hens are expected to remain above year-earlier levels through the first half of 2012.

Table Egg Production Forecast at 6.6 Billion Dozen in 2012

Table egg production is expected to increase slightly (0.5 percent) in 2012, reaching 6.64 billion dozen, up from 6.61 billion dozen in 2011. Production increases are expected to occur in all four quarters, but most of the total increase is expected in the first half of the year. The production growth is expected to come from small increases in the number of hens in the table egg flock, with relatively little change in the rate of eggs produced per bird. The number of birds in the table egg flock was down in 4 of the last 6 months of 2011, but the flock is expected to average above year-earlier levels through the first several months of 2012 as strong prices encourage production. Higher egg production is also expected to be supported by higher prices for most livestock and poultry products.

Hatching egg production for 2012 is forecast at 1.04 billion dozen, down 1.7 percent from 2011. The decline in production of hatching eggs reflects the expected decline in broiler production. The reduction in production is expected to mirror changes in broiler output, with production down on a year-over-year basis in the first three quarters and increasing in the fourth quarter.

Table egg production reached 1.69 billion dozen in fourth-quarter 2011, giving a total for the year of 6.61 billion dozen, up less than 1 percent (0.8) from the previous year. Table egg production was higher in all 12 months of 2011. Production of hatching eggs totaled 1.05 billion dozen in 2011, as production was slightly lower in all four quarters. The decrease in hatching egg production was due primarily to production declines in the broiler industry that reduced the need for meat-type eggs. The number of hens in the broiler-breeder flock averaged 3.2 percent lower in 2011 than in the previous year. The number of birds in the broiler-breeder flock is expected to remain lower than the previous year through the first half of 2012 and then to move slightly higher as demand for broiler chicks increases.

With only a small increase in total egg production and a strong export market for both shell eggs and egg products, domestic wholesale table egg prices (New York market, Grade A Large) averaged $1.15 per dozen in 2011, up 8.5 percent from the previous year. Prices in fourth-quarter 2011 averaged $1.31 per dozen, a gain of 6.5 percent from fourth-quarter 2010. In January 2011, table egg prices declined to $1.08 per dozen in the New York market, partially due to seasonal drops in demand after the New Year. With some growth forecast in production and lower exports, wholesale table egg prices are expected to average $1.03 to $1.09 per dozen in 2012.

In 2011 total exports of shell eggs and egg products were the equivalent of 275 million dozen, up 7 percent from the previous year. The exports were evenly balanced, with shell egg and egg product exports both totaling 138 million dozen. The value of egg exports increased to $408 million in 2011, up 14 percent. Much of the increase in export quantity was due to higher shipments to Asian countries, with shipments to Japan and Hong Kong up 55 and 23 percent. In addition, exports to Korea rose to 17.7 million dozen, 108 percent higher than in 2101. In North America, changes in shipments were mixed, with exports to Canada falling by 11 percent to 46 million dozen and exports to Mexico increasing by 29 percent to 19 million dozen.

Poultry Trade

December Broiler Exports Are Up from a Year Ago

Broiler exports for December 2011 totaled 582 million pounds, down by 6 -percent from a year ago. One of the major contributing markets was Mexico, which accounted for almost 97 million pounds of total broiler shipments in December 2011. Russia was the second largest U.S. export market, receiving over 59 million pounds of broiler meat. Growth in broiler shipments is expected to continue into 2012.

Fourth-Quarter Broiler Shipments Fall Short from Totals Recorded a Year Earlier

U.S. broiler shipments in the fourth-quarter of 2011 totaled 1.878 billion pounds, down 4 -percent from the broilers shipped the same period a year earlier. In spite of the low shipments to Russia during the last 3 months of 2011, shipments fell just short of the 2010 fourth-quarter record. Most of the increase recorded in the fourth-quarter was fueled by increased shipments to Angola, Iraq, and other non-major markets.

Turkey Exports Continue Strong in December

Turkey shipments totaled 71 million pounds in December 2011, up about 18 - percent from a year ago. The increase in turkey shipments recorded for December 2011 was stimulated mainly by strong shipments to Mexico, Hong Kong, and minor markets. Mexico and Hong Kong, two of the U.S. major turkey markets, both imported over 13.5 million pounds more in December 2011 than they did a year earlier.

Turkey Shipments in the Fourth-Quarter Finished at a Record High

The 2011 fourth-quarter turkey shipments were the largest ever recorded in a single quarter. Turkey exports totaled 199 million pounds for the fourth-quarter of 2011, up 14-percent from last year’s fourth-quarter. This increase is attributed partly to a strong demand for turkey meat from importing countries such as Mexico and Hong Kong. In comparison with the fourth-quarter of 2010, exports to Hong Kong rose by 51-percent in the fourth-quarter of 2011 and shipments to Mexico increased 21- percent over the same time period. While China continues to be the second largest turkey market for the U.S., its fourth-quarter turkey imports dropped 24-percent from the 2010 fourth-quarter.

Special Article

Imported Livestock Contribute to U.S. Domestic Meat Supplies

Kenneth H. Mathews, Jr.
Rachel J. Johnson

Beef and pork production in the United States have increased since 1972. More beef is now produced with a smaller cow herd (basis: January 1 U.S. cow inventory) than at any other period in U.S. history. Dressed weights of steers (fig. 1), heifers, cows (fig. 1), and bulls have also increased. Similar increases have occurred in dressed weights of hogs (fig. 1). However, part of the increased production is from meat production from cattle and hogs imported into the United States for feeding and slaughter. Unless accounted for, this production from imported livestock clouds what can be said about changes in U.S. technical efficiency in beef production.

Greater detail in trade data since the early 1990s has made it possible to better assess the contribution of foreign livestock to U.S. beef production. As a result, data indicate that the quantity of meat produced from each head of breeding stock— in some sense, a measure of technical efficiency gains and genetic improvement— has increased since 1972. After adjusting for beef produced from foreign-born animals, Brester and Marsh (1999) estimated that beef production per U.S. beef cow increased by 26 percent over the 25-year period ending in 1998. In 1976, commercial beef production reached 25.667 billion pounds, which included an estimated 497 million pounds of beef produced from cattle imported from Canada and Mexico (Brester and Marsh, 1999). After subtracting beef produced from foreign cattle, an average of 457 pounds of beef was produced per U.S. cow in the U.S. base cow herd of 54.971 million cows (January 1, 1976 total cow inventory).

Extending the Brester-Marsh methodology beyond 1998—the end point in their original study—implies an increase in beef production per U.S. cow of 44 percent from 1972 to 2010. In the most recent peak year of 2008, 26.561 billion pounds of beef were produced, 1.565 billion pounds of that beef attributable to cattle imported from Canada and Mexico. Again adjusting for beef from foreign livestock, an average of 600 pounds was produced per U.S. cow in the January 1 total cow inventory of 41.692 million cows.

Federally inspected average dressed weights reported by USDA's National Agricultural Statistics Service (NASS) have increased steadily over time (fig. 1). Annual average dressed weights for all cattle in 1970 that averaged 624 pounds per head had increased by almost 26 percent to 784 pounds in 2009, the heaviest annual average weights to date. The dressed-weight measures in both years include effects from imported livestock.

The U.S. depends on foreign sources for a significant share of its red meat. These sources include both meat imported directly as beef, pork, or lamb and the meat produced in the U.S. from imported live animals. For beef, foreign sources have accounted for as little as 8.2 percent (1974 and 1975) to as much as 18.2 percent (2005). Even during 2003 through 2005 when cattle imports from Canada were subject to restrictions due to the discovery of Bovine Spongiform Encephalopathy, beef from foreign sources accounted for 14.6 to 18.2 percent of U.S. beef supplies.

For 2011, cumulative imports of Canadian cattle into the United States were 35 percent lower year-over-year than in 2010, while imports of beef from Canada were 20 percent lower, again, year-over-year. Over the same period, imports of cattle from Mexico were up by over 16 percent. In 2011, estimated (by the Brester-Marsh method) beef produced from cattle imported into the United States from Canada and Mexico combined with all beef imported into the United States represented a quantity equal to about 11 percent of total U.S. beef supplies (excluding beginning cold storage stocks and on-farm production),. This was down from almost 13 percent in 2010 due to reduced imports of cattle from Canada.

Average Dressed Weights of Cattle and Hogs Have Increased Since 1972

Imports of Cattle and Hogs Have Increased Along With Total Production, 1972-2011

 


References

Brester, G.W., and J.M. Marsh. "U.S. Beef and Cattle Imports and Exports: Data Issues and Impacts on Cattle Prices." Policy Issues Paper No. 9, Trade Research Center, Montana State University, Bozeman, MT, April 1999.

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