Growing supplies of meat and dairy products will apply pressure on farm prices through 2017 into 2019. However, strong consumer demand is expected to offset the impact of large supplies, resulting in prices near or above last year’s prices, according to a report by University of Missouri Extension economists.
In the report, “Baseline Update for Livestock and Dairy Markets,” Scott Brown and Daniel Madison provided their midterm livestock outlook to the MU Food and Agricultural Policy Research Institute (FAPRI) annual update.
This is only the fourth year since 1980 that per capita supplies of beef, pork, and poultry increase at the same time prices stay strong, according to Brown.
“While more products are welcome news for today, they may set up future price drops if demand fails to keep pace with growth,” he said.
The previous consumer-driven price surge came in 2004 at the peak of the Atkins diet fame. That demand brought both a jump in domestic supply and higher prices, Brown explained.
This time, the current surge may not remain, the economists said. Projected declines in 2019 prices from 2017 include a 12% drop for fed steers, 14% for feeder steers, 7% for barrows and gilts, and 2% for chicken.
Export demand has provided some price support, but risks remain unknowns in those markets, Brown and Madison noted.
U.S. meat production reached nearly 1.3 billion pounds above this year during the first two quarters compared to the same period last year. Exports took more than 60% of that meat out of domestic markets.
In addition, the impact of ongoing trade negotiations with major trade partners remains uncertain, they said.