Tight Supplies Keeping Beef and Pork Prices Higher in 2014Wed, 18 Jun 2014 17:09:54 CDT
Higher prices look to continue for beef and pork producers, according to the Livestock, Dairy and Poultry Outlook released by the US Department of Agriculture's Economic Research Service.
In the beef/cattle outlook, increased precipitation could also motivate support for prices already at record levels for all weights of feeder cattle and cows. Cow slaughter could decline for the second quarter with recent precipitation over the Southern Plains. Steer and heifer slaughter are currently below previous expectations, but could increase into summer. Based on recent and current feeder cattle and corn prices, even with the jump in fed cattle prices, the ERS reports red ink could reappear for cattle feeders this summer.
Packers appear to be seeing positive margins. Despite record price levels, lackluster demand for middle meats is exerting downward pressure on retail prices and wholesale cutout values.
Demand for imported beef has risen as weekly US federally inspected cow and bull beef production through the end of May is nearly 11 percent lower than a year earlier. US cattle imports through April are five percent higher than a year ago. Imports are increasing from Australia (+26 percent) and Canada (+11 percent). This will more than offset fewer shipments from Mexico (-2 percent), New Zealand (-five percent), Uruguay (-24 percent) and Brazil (-25 percent). The forecast for beef imports for 2014 has been raised to 2.446 billion pounds, almost nine percent above 2013. Forecasted imports for 2015 are nearly unchanged as US beef production is not expected to increase for several years. Import demand looks to remain strong as the US will likely face more competition from Asia for global beef supplies.
US beef exports have remained strong through April, up seven percent year-over year, from increased demand for US Beef from Japan, Mexico and Hong Kong. Total US exports are expected to fall three percent this year to 2.508 billion pounds. Lower beef production and higher prices are expected to curb demand for US beef in the second half of 2014. This trend will likely continue into 2015 when exports are forecast to drop three percent year over year to 2.425 billion pounds.
US pork production is expected to increase for the second through fourth quarters of 2014. Heavier finished hogs are expected to partially offset lower numbers of slaughter hogs due to the PEDv-related piglet deaths. For the year, the average dressed weight is averaging 213 pounds, more than six pounds above average weights in 2013. Second quarter hog prices are expected to average $84 - $85 per hundredweight, more than 29 percent above last year. For the year prices are expected to average $76 - $78 per cwt, about 20 percent higher than 2013.
US pork exports in April totaled 436 million pounds, ten percent higher than last year. Foreign demand for US pork has likely occurred due to anticipated tightness of US pork supplies. Japan, Mexico, Columbia, South Korea and Taiwan are also experiencing animal disease outbreaks which could further increase demand for US pork products.
High pork prices are bringing in more than five percent more pork imports in the first four months of the year. Higher US pork prices are bringing in interest from countries whose pork products are not typically competitive with the US due their high production costs. Larger imports are coming in from the United Kingdom (+32 percent), Ireland (+24 percent), Denmark (+24 percent), Germany (+41 percent), Hungary (+73 percent), Spain (+67 percent) and Italy (+20 percent). For 2014, imports are expected to total 922 million pounds.
Consumers are paying more for pork. According to the Bureau of Labor Statistics and USDA Agriculture Marketing Service, second quarter value is expected to be in the mid-$3.90s and the second-half retail pork values will likely break the $4 per pound level.
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