Production of meat, poultry trending up

Production of meat, poultry trending up

Commercial red meat and poultry production grew 5% in July, and an analysis projects steady growth through 2018.

WITH the historic drought of 2012 still stinging like a fresh wound for many producers, the summer of 2013 might be viewed as something of a turning point in many sectors.

Taking a look at the latest data from the U.S. Department of Agriculture and an updated baseline projection from the University of Missouri's Food & Agricultural Policy Research Institute (FAPRI), it is clear that economists expect meat and poultry production to trend upward over the next five years.

First, consider the macroeconomic environment for a moment, as domestic meat consumption is fairly well tied to consumers' disposable income and feelings about the state of their own economic affairs.

An August update from the Federal Reserve Bank of Chicago indicated that economic growth in the Midwest increased in July, perhaps a bit more aggressively than the broader U.S. economy.

With grilling season well underway, USDA reported that commercial red meat production in July jumped 5% compared with last year, tallying 4.16 billion lb. Even near or at record prices, consumers were still eager to eat meat.

Beef production, specifically, totaled 2.29 billion lb., up 4% from July 2012. Cattle slaughter totaled 2.89 million head, up 4% as well, with liveweights up 7 lb. at an average 1,302 lb. per head.

The market is expecting slaughter weights to taper off in the latter months of 2013 based on Merck's decision last month to suspend sales of its zilpaterol beta-agonist (Zilmax) in response to concerns from packers such as Tyson and Cargill, both of which said they will not be accepting cattle finished on the growth-promoting feed additive.

Substitution with Elanco's ractopamine (Optaflexx), a competing but seemingly less aggressive product, is expected to keep liveweights from falling back to a pre-Zilmax baseline, but a drop of 10-15 lb. per head would not be totally surprising.

July pork production, meanwhile, totaled 1.84 billion lb., up 7% from last year. Hog slaughter totaled 9.08 million head, up 6% from last year, with the average liveweight up 2 lb. at 271 lb. per head.

As feed costs have started to show a light at the end of the proverbial tunnel, producers aren't feeling quite so bad about holding animals a little longer so they put on a few more pounds.

That trend might likewise continue if feed prices moderate — as expected — through harvest; however, a subpar corn and soybean crop could dampen those expectations.

Accumulated red meat production through the first seven months of the year reached 28.3 billion lb., up slightly from the same period in 2012. Beef and pork production were both up slightly, and lamb production was up 2%, but veal production fell 6%.

Similar to beef and pork, USDA reported that poultry ready-to-cook production in July totaled 3.85 billion lb., up 5% from July 2012. The agency noted that June's revised certified production total was down 4% from last year, making July's preliminary figure a major reversal.

Chicken slaughter weights averaged 5.84 lb. per bird, up 1% from last year. Mature weights, meanwhile, fell 4% to 5.86 lb. per bird.

Total young chicken slaughter tallied 4.37 billion lb., with mature birds accounting for 68.3 million lb. Turkey slaughter totaled 643 million lb., up 3% from last year, with the average weight up 2% at 29.7 lb. per bird.

 

Chickens 'humming'

In the August "Cold Storage" report, USDA reported that total frozen poultry supplies as of July 31 rose 3% from June and 5% from a year ago. Total stocks of chicken grew 4% on the month and were 5% larger than July 2012.

Likewise, turkey stocks in freezers were up 3% from last month and were up 6% from last year.

With chicken stocks growing in midsummer, McDonald's announcement that it will put chicken wings on its national menu this month could be well-timed news. The fast-food chain tested the product last January in Atlanta, Ga. — apparently to rave reviews.

The so-called "Mighty Wings," miniature chicken wings or drummettes that are lightly breaded and fried, will debut nationwide at most McDonald's locations on Sept. 9 and will be available systemwide by Sept. 24. The limited-time offer will run through November, according to Feedstuffs' sister publication Nation's Restaurant News.

It reported that McDonald's will sell Mighty Wings in orders of three, five and 10 pieces, starting at $2.99.

Economists Steve Meyer and Len Steiner pointed out in their "Daily Livestock Report" that the product introduction comes at a time when "the broiler sector is really starting to hum." Eggs set this summer have been steady, counter to seasonal tendencies of declining broiler-type production, indicating that expansion is already occurring.

"Each of the last two weeks for which we have data (the last being Aug. 16) show year-on-year increases of 4.7% in the number of eggs set," they wrote. "Those figures will not translate into chicken production for another 8-10 weeks, but the trend is pretty apparent at this point."

Likewise, growth in the broiler hatchery flock averaged 1.8% from January through July, followed by a jump of 4.6% as of Aug. 1 (Figure). Meyer and Steiner said that was the largest year-over-year growth rate for the broiler hatchery flock since July 1999.

While high feed costs may have tempered industry expansion plans somewhat, the bigger problem in the first half of the year was simply a tight supply of breeder pullets as companies in Mexico bought large numbers of fertilized eggs to restock influenza-depleted flocks. With that situation now somewhat in the rearview mirror, expansion is poised to really gear up.

In fact, if one adds another week of data to Meyer and Steiner's observations, broiler-type eggs set are now running 5% ahead of last year, with 201 million eggs set in incubators during the week ending Aug. 24. Placements during the week were up 1% from the same week in 2012.

Production of meat, poultry trending up

 

Growing meat

With that in mind, let's revisit the FAPRI baseline projection released last week. Taking into account updated acreage, yield and production estimates from USDA's August "Crop Production" report, FAPRI updated its projections of feed and livestock production.

Corn prices are now expected to average $4.65/bu. for the crop harvested this fall, and as stocks rebuild, prices are expected to fall even lower in subsequent years.

Soybean prices, likewise, are expected to taper off from an average of $11.33/bu. for 2013 production, although both crops are susceptible to changing production estimates from now through harvest.

FAPRI found that lower feed prices will reduce livestock and poultry production expenses, not surprisingly, and set the stage for increases in meat production over the next five years.

After setting a bottom of 24.5 billion lb. in 2014, beef production is expected to grow steadily to 26.4 billion in 2018.

U.S. pork production will continue to see year-over-year increases, growing to 25.7 billion lb. in 2018 from an estimated 23.4 billion this year. Chicken production will also continue to grow, from 37.3 billion lb. in 2013 to 40.9 billion in 2018.

According to FAPRI's analysis, U.S. per-capita meat consumption is likely to grow from 200.4 lb. in 2013 to 206.6 lb. in 2018 (Table).

 

U.S. per-capita meat consumption, lb.

 

2011

2012

2013

2014

2015

2016

2017

2018

Beef

57.3

57.4

56.1

54.2

54.0

54.4

55.1

55.7

Pork

45.7

45.9

46.9

47.6

48.5

49.1

49.1

48.5

Broiler

82.9

80.4

81.2

83.6

85.1

85.5

85.5

85.7

Turkey

16.1

16.0

16.2

16.4

16.8

16.8

16.8

16.7

Sum

202.0

199.7

200.4

201.9

204.4

205.8

206.4

206.6

Source: Food & Agricultural Policy Research Institute.

 

Volume:85 Issue:35

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