As expected, USDA revised lower its estimates for pork production in 2014. This is a recognition of the fact that pork supplies simply will not increase as quickly as expected despite notably lower feed costs.

Total pork production is forecast at 23.777 billion pounds, 2.6 per cent higher than a year ago but down from the 3.2 per cent increase forecasted in September.

Pork exports will likely remain a wild card, with China demand a key factor should they decide to become more active in the US market.

Exports are currently forecast at 5.270 million pounds, 4.3 per cent higher than a year ago.

Per capita pork consumption is currently forecast up just 1 per cent from a year ago, which helps explain why pork prices are forecast to post only modest declines despite a sharp drop in feed costs.

So with less beef and modest pork expansion, it appears that poultry will be the main channel to absorb the extra supply of corn harvested this year.

USDA has pegged broiler output to increase by 2.9 per cent, which appears conservative at this point.