Record level production is projected for the U.S. livestock, poultry and dairy sectors in 2015, according to individuals speaking at the U.S. Department of Agriculture Outlook Forum.

USDA chief economist Robert Johansson said the agency projects total meat and poultry production will be at a record high of 95 million pounds in 2015, mostly due to record pork and broiler production. Milk production is also projected to be at a record level in 2015 at 211.5 billion pounds.

Total livestock and poultry production declined 1.2% in 2014, the first year-over-year decline, only to be followed up in 2015 which is projected at a 3.2% increase. If realized, it will be the largest year-over-year percentage increase in livestock and poultry production since 2002. Johansson attributed the production increased to record high prices coupled with falling feed costs.

Michael Jewison, agricultural economist at the World Agricultural Outlook Board, noted both the U.S. cattle inventory and beef cow herd are expected to continue expanding during 2015, assuming normal weather conditions.

Jewison said packer gross margins were “generally weak in 2014 and high fed cattle prices coupled with consumer resistance to high beef prices could limit what packers are willing to bid for fed cattle during 2015.” Feedlot operators are expected to see negative margins during 2015 as high feeder calf prices will likely offset reductions to feed costs, limiting flexibility in price negotiations.

Positive producer returns and lower feed costs over much of 2014 set the stage for strong expansion in the hog sector, Johansson said.

Liz Wagstrom, chief veterinarian at the National Pork Producers council, shared that the initial spike in cases of Porcine Epidemic Diarrhea virus (PEDv) are now half of what was seen last fall. Currently the global picture for PEDv outbreak shows a concentration of cases in the Pacific Rim region. While occurrences of PEDv uptick during the winter months, the increase this season has not been as significant.

Higher farrow intentions and continued growth in litter rates are projected to increase the 2015 pig crop to be over 5.4% higher than in 2014. “If realized, this would be the largest year-over-year percentage increase in the pig crop since 2007 and set the stage for sharply higher slaughter levels in the second half of 2015 and into 2016,” Jewison said.

Broiler production is expected to increase 3.6% to 40 billion pounds. “Strong domestic demand is expected to continue into 2015, although with lower broiler prices,” Jewison said.

During the food-inflation session, USDA economist Annemarie Kuhns said low petroleum and energy prices "may have a mitigating effect on food price inflation," forecast for 2.5% this year, down slightly from the 20-year average of 2.6%.

Total U.S. egg production in 2015 is expected to be 8.4 billion dozen, 2.3% above 2014.

Kuhns said egg prices in California may rise because of requirements to allow more space per bird. But the egg supply in the rest of the country could expand if egg farmers decide against modifying their barns to meet the California rules. USDA forecasts a 3% increase in egg prices this year, down from the 8.4% increase of 2014.

Demand and exports

Meat demand is expected to increase in 2015, with moderate economic growth and larger meat supplies, Jewison said.

Exports are forecast to decline for all of the major meats due to strong competition and expectations of slow demand growth. “U.S. dollar strength will likely also be a headwind for U.S. exports,” Jewison said. Johansson also shared that the strong dollar has eroded export competitiveness.

The forecast for livestock, poultry and dairy product exports is down from the November forecast by nearly $2 billion to $31.8 billion on lower prices and volumes.

Broiler exports remain strong, but down slightly from 2014, a record year. However, over the next 10 years, broiler exports are expected to grow by 16%.

Pork exports too are expected to be down from 2014, but are expected to expand 15% over the next decade. Beef and veal exports are expected to fall slightly in 2015, due to the high beef prices, but over the next 10 years projected to grow 38%.

Dairy exports, which have shown remarkable growth over the past five years, are expected to fall slightly in 2015. Over the next 10 years, dairy product exports are expected to grow 34%.