CME: Commercial Beef Production Revised Downward; Pork Production Revision Raised12 April 2013
US - On 10 April, USDA issued its latest forecasts for beef, pork and poultry production for the remainder of the year, write Steve Meyer and Len Steiner.
The first forecasts for 2014 will be issued next month. The charts below show how the production estimates for the three main species have evolved in the last 12 months and put the current changes in some perspective.
The biggest revision in the latest report was with regard to beef production. Total commercial production is estimated to be 24.976 billion pounds, 230 million pounds or 0.9 per cent less than the forecast presented in the March report. The decline likely reflects expectations for a notable reduction in cattle slaughter, especially in the second half of the year and a slowdown in cattle carcass weight gains.
Smaller feedlot placements will continue to limit the number of cattle coming to market in the next few months. The slowdown in weight gains is also significant as last year the surge in cattle weights managed to offset a good portion of the decline in the number of cattle coming to market.
The changes to imports and exports were relatively small, with import volume increased by 10 million pounds or 0.4 per cent and export volume reduced by 15 million pounds or 0.6 per cent. The adjustments largely reflect trade flows based on the February data and to a lesser extent the pace of weekly export shipments todate. In all, the latest WASDE report reduced the per-capita consumption figure by 0.7 per cent compared to it latest forecast and per capita consumption for 2013 is now pegged at 55.7 pounds, down 2.9 per cent compared to a year ago.
Despite the reduction in meat availability, the price response at both retail and foodservice counter has been underwhelming. Live cattle futures dropped to contract lows in Wednesday's trading. Canada also announced that it would impose about $1 billion in tariffs in US goods to compensate for the impact of Mandatory Country of Origin Labelling (MCOOL) on Canadian beef and pork coming into the US. Canada is one of the largest buyers of US beef and the tariffs will likely impact US beef shipments to the Canadian market. Please note that yesterday (11 April) was the last day for comments regarding MCOOL.
USDA raised its guidance on pork production for 2013. Total commercial pork output was estimated at 23.522 billion pounds, 130 million pounds or 0.6 per cent larger than the forecast presented in March and 1.1 per cent higher than 2012 production. The adjustment reflects the upward revision in pig crop numbers presented in the latest Hogs and Pigs report.
Lower feed costs in the second half are seen improving hog producer profitability and support a modest increase in year over year production. USDA also lowered its estimates of US pork production, reducing expected 2013 pork exports by 160 million pounds or 3 per cent compared to the forecast given in March. As a result, pork exports in 2013 are now expected to be 3.3 per cent smaller than they were a year ago.
The combination of more pork coming to market and less going to export is expected to bolster pork availability in the domestic market, helping keep pork prices in check. Pork per capita consumption is now expected to be 46.8 pounds per person (retail wt), 2 per cent higher than a year ago.
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