A pair of ag economists say in light of the gloom hanging over the general economy, the performance of livestock and meat markets is remarkable. Mississippi State University ag economics professor John Michael Riley and American Farm Bureau Federation Livestock Economist John Anderson said while the supply side of the market remains supportive, demand also has offered some bright spots.
The pair suggested fundamental supply factors deserve the lion’s share of the credit for this summer’s livestock price strength. Sources have indicated a 2.2% cumulative decline in total red meat production for the January through July period, compared to a year ago. Frozen red meat stocks, as of July 31, were down 20% from the prior year.
It is unlikely, however, that cattle and hog markets would be where they are now without some pull from the demand side, according to Riley and Anderson. They say U.S. red meat exports have been encouraging and forecasts are for this trend to continue. In its August World Agricultural Supply and Demand Estimates report, USDA substantially raised projections for 2010 exports of beef, pork and poultry. The agency is now predicting a 13% increase in beef exports over last year and a 9% jump in pork exports.
“While domestic demand will clearly have the greatest influence on the direction of the market moving forward, foreign demand had provided a helpful boost to the market this summer and has helped to put livestock markets into a much better than expected position headed into fall,” the economists said.
Source: Kansas Livestock Association