USDA Ag Outlook Forum: Solid meat demand needs to continue to counter bigger supplies
USDA reported this week at its annual Ag Outlook forum that total US red meat and poultry production in 2020 increased to a record 106.5 billion pounds, despite facing unprecedented challenges due to the global COVID-19 pandemic.
Pork and broiler production increased in 2020; however, beef production was virtually unchanged while lamb and turkey production was estimated lower. For 2021, total red meat and poultry production is forecast to increase about 1 percent to 107.6 billion pounds driven primarily by record production of beef, pork, and broiler meat. Turkey production is expected to continue to decrease with production growth late in the year tempered by rising feed costs.
In 2020, livestock and broiler prices were lower, reflecting reduced packer demand in the second quarter of the year. Nonetheless, prices did rebound in the second half of the year but averaged lower than 2019 prices on an annual basis. For 2021, growth in demand is expected to support higher livestock and poultry prices, despite expected increases in production.
Feed outlook 2021 — expect higher prices
On an annual basis, US feed prices are forecast higher in 2021, said USDA. The annual 2020/21 corn price is forecast to average $4.30 per bushel, up 20.8% from the previous year. The 2021/22 average corn price is forecast to decline slightly to $4.20 per bushel. Soybean meal price for 2020/21 are forecast to average $400 per ton, up 33.6% from last year. The 2021/22 average soybean meal price is forecast to decline to $390 per ton.
Pork
The USDA Quarterly December Hogs and Pigs estimated the total number of hogs and pigs on December 1 at 77.5 million head, 1 percent below 2019. Producers farrowed 3.164 million sows during the September-November period, down 1% when compared to the previous year. The September-November pigs per litter estimate was fractionally lower than last year at 11.05.
Estimated year-over-year lower farrowings and pigs per litter resulted in the 2020 September-November pig crop 1% lower at 34.973 million head. Producers indicated intentions to farrow about 2% more sows in the December 2020-February 2021 quarter, but intend to farrow 1% fewer sows in the March-May 2021 quarter. Hog production will continue to expand as growth in pigs per litter will support larger pig crops.
In 2021, commercial pork production is forecast to reach a record 28.7 billion pounds, up 1.4% year over year. Increasing slaughter hog inventories will boost commercial pork although lighter annual hog carcass weights will offset slaughter gains. First-half 2021 pork production is forecast higher on larger estimated pig crops from the second half of 2020, while second half 2021 pork production will reflect slightly higher average farrowing intentions for the first half of the year and growth in pigs per litter.
US pork exports for 2021 are forecast to reach 7.2 billion pounds, about 1.5% lower than 2020.
The firm growth in import demand from China is expected to slow in 2021 as China begins to recover from African swine fever (ASF) and begins to rebuild its sow herd and live hog inventories. However, export growth in other key markets such as Mexico, Canada and Japan (and to a lesser degree several Latin American countries) are expected to partially offset declines from China. Pork imports for 2021 are forecast at 0.9 billion pounds, up 4.5% from 2020.
U.S. hog prices, on a national base, 51% to 52% lean, live equivalent, are forecast to average $50.50 per cwt for 2021, higher than last year’s price by nearly 17%. Despite higher hog slaughter expectations, firm demand will support higher prices.
Broilers
The 2021 US broiler production forecast is projected to be record large at 44.9 billion pounds, driven primarily by heavier average bird weights. However, the combination of higher feed prices and weakening returns are expected to limit production growth.
US broiler exports to several key markets were hampered in 2020 as the global economy slowed because of the global pandemic as well as non-SPS trade barriers and challenges. However, China emerged as a strong market late in the year after bans on U.S. poultry meat were lifted. This supported stronger export growth in 2020. For 2021, broiler meat exports are forecast to increase fractionally to 7.4 billion pounds supported by continued import demand from China and gradual recovery of global economic conditions.
The National composite wholesale broiler price is forecast to average $0.85 per pound in 2021, up 15.4% relative to last year. Broiler prices are forecast higher for the year, supported by improving demand and lighter anticipated production in the second half of the year.
