The U.S. Department of Agriculture released the latest “World Agricultural Supply & Demand Estimates” report this week, forecasting that total U.S. red meat and poultry production for 2019 will increase above 2018.

USDA said beef production in 2019 will rise due to increased slaughter and heavier carcass weights, while pork production will rise due to growth in farrowings and pigs per litter, which will support larger pig crops. Hog weights are also projected to be higher in 2019, USDA added.

The poultry and egg sectors are expected to experience production increases. USDA reported that broiler production is projected to surpass 2018 as the industry responds to favorable broiler prices, and a slow increase in turkey production is foreseen as prices are expected to move above year-earlier levels beginning in late 2018. USDA forecasts higher egg production as the sector continues to respond to favorable prices during much of 2018.

USDA did reduce the 2018 forecast for total red meat and poultry production.

In the beef sector, USDA said cattle slaughter in the second quarter has been slower than anticipated, and the pace of marketings in the second half of the year will be slower. However, USDA expects carcass weights to increase for second half of the year, "partly offsetting the reduction in the slaughter forecast.”

The second-quarter pork production forecast was reduced on the current pace of slaughter, but the forecast for the second half of the year is unchanged, the report showed.

Broiler production was adjusted for March slaughter data, and the forecast is unchanged. Turkey production forecasts were reduced from the previous month based on slow recovery in demand and lower first-quarter-production. USDA slightly reduced egg production for 2018 due to first-quarter-production data; no changes were made to the outlying quarters.

Exports to stay strong

For 2019, USDA said larger beef supplies and firm global demand are expected to support stronger U.S. beef exports relative to 2018. Pork exports are also expected to increase next year as expanding supplies and competitive prices support demand for U.S. pork. Both beef and pork imports are projected to be higher in 2019.

Broiler exports are projected to be higher based on expected continued gains in foreign demand, USDA said.

Price forecasts

Despite the rising production, USDA said fed cattle and hog prices in 2019 should be above 2018 levels as relatively strong demand is expected to absorb supply increases.

The 2019 broiler price forecast was lowered due to increasing supplies and competition from expanding red meat supplies. Turkey prices are expected to increase with slow growth in supply and strengthening demand. USDA reduced the egg price outlook for 2019 since slow growth in strengthening the spikes in early 2018 prices are not expected to be repeated in 2019. However, demand is expected to remain robust in the face of increased production.

The 2018 cattle price changed little from the previous month, but the hog price was reduced. USDA raised broiler prices due to demand strength. The 2018 egg price forecast was reduced on current second-quarter prices, but no changes were made to outlying quarters. Turkey prices were lowered as the market continues to balance supplies with weaker-than-expected demand.

Milk production still rising

According to the USDA report, milk production for 2019 is expected to rise on the gradual recovery in milk per cow. Cow numbers are expected to remain near 2018 levels.

USDA said commercial exports on both a fat and skim-solids basis are projected to be higher than the previous year on robust global demand. Fat and skim-solids basis imports were unchanged from 2018.

With stronger domestic and export demand expected, cheese, nonfat dry milk (NDM) and whey prices are projected to be higher for 2019. Butter prices, on the hand, are expected to be slightly lower.

USDA increased the Class III price due to stronger cheese and whey prices. The Class IV price was also increased as a result of a stronger expected NDM price that more than offsets the lower butter price. The 2019 all milk price is projected at $16.25-17.25/cwt., slightly higher than 2018.

Lower milk cow numbers and slow growth in milk per cow caused USDA to lower the 2018 milk production forecast. Exports were raised from the previous month on both a fat and skim-solids basis on strong global demand. Imports were lowered on a fat and skim-solids basis. USDA raised cheese, butter, NDM and whey prices from the previous month, resulting in both Class III and Class IV prices being raised. The 2018 all milk price was increased to $16.20-16.70/cwt.