The U.S. Department of Agriculture released the October “World Agriculture Supply & Demand Estimates” (WASDE) report this week, which showed a decline in the 2016 forecast for total red meat and poultry production to 97.439 billion lb., down from USDA's forecast of 97.552 billion lb. in September.
USDA said the change reflected slightly higher beef and pork production that was more than offset by lower broiler production.
USDA raised beef production slightly due to expectations for increased slaughter, although it slightly reduced carcass weights. Pork production for 2016 was also raised based on the pace of third-quarter slaughter. Broiler production was lowered as recent production data points towards continued slow growth in bird weights. No change was made to turkey production.
USDA also raised the total red meat and poultry product forecast for 2017, primarily due to increased pork production. Beef production was raised based on expectations for increased first-quarter slaughter, but the broiler production forecast was lowered on more moderate growth in production continuing from 2016. The turkey production forecast was unchanged. Egg production forecasts for 2016 and 2017 were raised on continued growth in table egg laying flocks.
USDA raised beef import and export forecasts for 2016 and 2017 as slightly larger supplies of beef in a number of exporting countries support increased imports. Additionally, USDA said lower domestic beef prices make the U.S. more competitive in world markets. The pork export forecast for 2017 was raised on expectations for more sales to Asia. Broiler and turkey export forecasts were unchanged for 2016 and 2017.
Cattle, hog, broiler and turkey prices for the last quarter of 2016 were reduced from last month due to large supplies of product. For 2017, the continued large supplies of beef, pork and broiler meat are expected to pressure prices throughout the year, USDA said. Egg prices were also reduced for both 2016 and 2017.
For dairy products, USDA raised the milk production forecasts for 2016 and 2017 from last month as the cow inventory has grown more rapidly than previously expected. “The higher cow inventories appear to reflect growth in herds supplying expanding dairy product facilities,” USDA added.
Expectations for increased imports of butter and several other dairy products led USDA to raise its import forecasts for 2016 and 2017, while exports are also expected to be up as increases in Oceania prices and relatively low U.S. prices should make the U.S. more competitive in world markets. Ending stocks were reduced as lower prices should encourage increased demand from both export and domestic markets.
Cheese and butter price forecasts for 2016 and 2017 were lowered due to expectations for larger milk supplies. However, USDA said nonfat dry milk (NDM) and whey will likely benefit from increased competitiveness in export markets, and stronger exports will help support prices of those products. As such, it raised price forecasts for NDM and whey from last month.
USDA reduced the Class III and Class IV price forecasts from last month as lower cheese prices more than offset the higher whey price in the Class III calculation and the lower butter price outweighed the NDM price increase in the calculation of the Class IV price. The all-milk price forecast was lowered to $15.80-15.90/cwt. for 2016 and $15.55-16.45/cwt. for 2017.
The October fed cattle future market continued to implode this week. Nearby contracts closed lower Monday at $98.875/cwt. and continued fall through Thursday’s lower close of $94.45/cwt.
October feeder cattle futures also plunged this week. Nearby contracts closed lower Monday at $124.65/cwt. and continued the downward trend to Thursday’s lower close of $119.45/cwt.
For the beef cutouts this week, Choice and Select were lower at $181.60/cwt. and $172.61/cwt., respectively.
October lean hog futures posted gains this week. Nearby contracts closed unchanged Monday at $50.675/cwt. but climbed to Thursday’s higher close of $52.625/cwt.
Pork cutout values were mostly lower this week. The wholesale pork cutout decreased to $72.52/cwt. Loins were lower at $76.96/cwt., while hams were higher at $51.51/cwt. Bellies climbed to $109.43/cwt.
Hogs delivered to the western Corn Belt were lower this week, closing at $47.02/cwt. on Thursday.
In the poultry markets, the Georgia dock was unchanged Wednesday at $1.10/lb. Breast meat was lower at $1.53/lb., while leg quarters were unchanged at 31 cents/lb. Wings were also unchanged at $1.535/lb.
According to USDA, egg prices have been steady, with a mostly steady undertone. Offerings and supplies have been moderate to heavy. Demand has been light to moderate.
Large eggs delivered to the Northeast were lower at 43-47 cents/doz. Prices in the Southeast and Midwest were also lower at 46-49 cents/doz. and 35-38 cents/doz. Large eggs delivered to California were lower at $1.03/doz.
For turkeys, USDA said the market is mixed, mostly steady. Offerings and demand have been light. Prices for hens and toms decreased to $1.125-1.28/lb. and $1.095-1.28/lb., respectively.