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LIVESTOCK MARKETS: USDA lowers 2018 total meat production

broiler chickens Credit: buhanovskiy/iStock/Thinkstock.
Beef, pork export forecasts for 2018, 2019 raised on strong demand.

In the latest World Agricultural Supply & Demand Estimates report, the U.S. Department of Agriculture slightly reduced its 2018 forecast for total meat production from last month to 103.08 billion lbs., which it said was due to decreases in commercial pork and turkey production.

USDA left the annual beef production forecast unchanged at 27.09 billion lbs.as increases in second-half cattle slaughter were offset by lighter expected carcass weights.

The 2018 pork production forecast was reduced to 26.68 billion lbs. on the current pace of slaughter and slightly lighter expected carcass weights during the third quarter. USDA will release the Quarterly Hogs & Pigs report on Sept. 27, which it said will provide an indication of producer farrowing intentions into early 2019.

The second-quarter broiler production estimate was raised slightly, reflecting revised hatchery data but no change was made to outlying forecasts. USDA lowered the second-half turkey production forecast due to recent production data. However, it was only a slight change from the prior month.

For 2019, beef, pork, broiler and egg production forecasts were unchanged and only a small increase was made to turkey production, USDA said. The forecast for total meat production in 2019 was raised slightly to 105.76 billion lbs.

Beef import forecasts were unchanged for 2018 and 2019, but USDA did raise export forecasts on expectations of continued strong demand to a number of key trading partners. Pork imports for 2018 and 2019 were lowered from last month. Despite market implications due to ongoing trade negotiations, USDA still raised the pork export forecasts for 2018 and 2019 from the previous month as U.S. pork is expected to remain competitively priced in international markets. Broiler, turkey and egg export forecasts for 2018 and 2019 were unchanged.

As for prices, the third-quarter fed steer price forecast was raised from last month on current price strength, but the fourth-quarter forecast was reduced as the pace of marketings was raised. The 2018 and 2019 price forecast remained unchanged at $115-117/cwt. and $113-122/cwt., respectively.

USDA did lower the hog price forecasts for 2018 to $43-44/cwt. on current prices and pressure from expected abundant meat supplies. For 2019, the first-quarter hog price forecast was reduced slightly, but the annual price forecast range was unchanged at $39-42/cwt.

Broiler prices were reduced from last month for 2018 and 2019 to $1.00-1.08/lb. and $0.92-1.00/lb., respectively, on strong competition with other meats. The annual turkey price forecast was reduced to 80-82 cents/lb. for 2018 as slightly higher third-quarter turkey prices are more than offset by expected lower prices in the fourth quarter. The 2019 forecast was also reduced 81-88 cents/lb.

The third-quarter egg price forecast for 2018 was reduced on recent prices, but no change was made to the outlying forecasts.

The milk production forecast for 2018 was lowered to 217.80 billion lbs. on slightly lower milk cow numbers and a slower rate of growth in milk per cow in the third quarter. However, for 2019, the milk production forecast was raised from the previous month to 221.00 billion lbs. on slightly higher cow inventories.

For 2018 and 2019, USDA lowered fat basis export forecasts from the previous month on slowing shipments of whey products and a number of other dairy products, while fat basis import forecasts for 2018 and 2019 were raised on higher purchases of imported butterfat products and cheese. On a skim-solids basis, the export forecasts for 2018 and 2019 were lowered on weaker whey products sales to China. Skim-solids basis import forecasts for 2018 and 2019 were raised on continued strong purchases of cheese and other miscellaneous dairy products.

Cheese, nonfat dry milk (NDM), and whey prices were all forecast higher for 2018 while butter prices were lowered from the previous month. The 2018 Class III price forecast was raised to on higher forecast cheese and whey prices. The Class IV price was also raised as higher forecast NDM prices more than offset lower butter prices. For 2019, NDM and whey prices were raised while the butter price forecast was reduced from last month. The 2019 cheese price forecast was unchanged. The all-milk price was raised to $16.30-16.50/cwt. for 2018 and $16.75-17.75/cwt. for 2019.

Market recap

October live cattle futures were mixed this week, closing higher Monday at $110.15/cwt. but lower Thursday at $110.80/cwt.

October feeder cattle futures started the week lower, closing Monday and Tuesday at $151.525/cwt. and $152.45/cwt., respectively. However, October contracts posted gains as the week progressed, closing higher Thursday at $155.40/cwt.

The Choice and Select cutout closed lower Thursday at $204.04/cwt. and $197.24/cwt., respectively.

Nearby lean hog futures were mixed this week, finding some support as East Coast hog operations and processors were expected to sustain damage from Hurricane Florence. October contracts closed higher Monday at $55.95/cwt. but lower Thursday at $55.675/cwt.

In the pork cutout this week, the wholesale pork cutout closed higher at $71.05/cwt. Loins were lower at $75.27/cwt. while hams were higher at $53.68/cwt. Bellies were higher, closing at $97.32/cwt.

Hogs delivered to the western Corn Belt were higher, closing Thursday at $46.59/cwt.

USDA reported the Eastern Region whole broiler/fryer weighted average price on Sept. 7 at 84.80 cents/lb.

According to USDA, egg prices were steady, with an overall steady undertone. Offerings and supplies were mixed but mostly moderate. Demand was moderate to fairly good.

Large eggs delivered to the Northeast were lower at 98 cents to $1.02/doz. Prices in the Southeast and Midwest were also lower at $1.02-1.05/doz. and 89-92 cents/doz., respectively. Large eggs delivered to California were lower at $1.45/doz.

For turkeys, USDA said the market was steady. Offerings and demand have been light to moderate. Prices for hens were higher on the lower end of the range at 77-86 cents/lb., and prices for toms were higher on the lower end of the range at 73-85 cents/lb.

 

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