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WASDE: Report Shows Rise In Current Months Red Meat & Poultry Production

LIVESTOCK, POULTRY, AND DAIRY: The forecasts for 2018 red meat and poultry production are raised from last month. The beef production forecast is raised on higher expected cow slaughter in the third quarter. USDA will release the Cattle report on July 20th, providing a mid-year estimate of the U.S. cattle inventory as well as producer intentions regarding retention of heifers for beef cow replacement. Forecast pork production is raised from last month as higher expected second-half hog slaughter more than offsets lower second-quarter slaughter. A more rapid pace of hog slaughter is expected in the third quarter and USDA’s Quarterly Hogs and Pigs report estimated the March-May pig crop was 4 percent above 2017 which will result in higher fourth-quarter hog slaughter. Second and third-quarter broiler production is raised on recent hatchery data and expected heavier bird weights. Turkey production is raised slightly on production data to date. Egg production is raised from the previous month as egg prices are forecast higher and feed costs lower.
For 2019, the red meat and poultry production forecast is raised as increases in pork and broiler production more than offsets expected declines in beef production. Forecast beef production is reduced from the previous month on lower expected steer and heifer slaughter the first half of the year. The pork production forecast is raised; the Quarterly Hogs and Pigs report indicated that producers intend to farrow 2 percent more hogs over the next two quarters, which coupled with expected growth in pigs per litter will push first-half hog slaughter higher. Forecast broiler and egg production is also raised from the previous month, as higher prices and lower expected feed prices support continued expansion. Forecast turkey production is unchanged from the previous month. The beef import forecast is unchanged for 2018, but the export forecast is raised from the previous month on recent trade data and continued strong exports to Asia. The 2019 beef export forecast is also raised from last month. Pork trade forecasts for 2018 and 2019 are unchanged from the previous month. Lower pork product prices are expected to help offset increased competition in key markets in 2019. No change is made to 2018 and 2019 broiler and turkey export forecasts. The 2018 egg export forecast is raised on recent trade data, but no change is made to the outlying quarters. Small revisions are made to historical trade estimates. The cattle price forecast for 2018 is lowered slightly from last month, reflecting June price data. Forecast 2019 cattle prices are unchanged from the previous month. The hog price forecast is raised for 2018 as recent price strength and expected higher prices in the third quarter more than offset lower prices in the fourth quarter. The hog price forecast for 2019 is lowered on increased supplies of pork. Broiler prices are raised for 2018 on current price strength while turkey prices are unchanged. No changes are made for 2019 broiler and turkey price forecasts. Egg prices are raised for 2018 on higher-than-expected prices to date. The 2019 egg price is reduced slightly on increased supplies.
Milk production forecasts for both 2018 and 2019 are lowered from last month on slower-thananticipated growth in milk per cow and lower cow numbers. Although tempered by lower expected feed costs, lower milk prices will likely weaken producer margins, resulting in lower cow numbers and slower growth in milk per cow. USDA’s Cattle report, to be released on July 20th, will provide a midyear estimate of dairy cow and dairy replacement heifer inventories.
For 2018, the fat basis import forecast is raised from the previous month on higher imports of butterfat products. Fat basis imports are unchanged for 2019. The 2018 fat basis export forecast is unchanged from the previous month but is raised for 2019 as the U.S. is expected to be price competitive and higher expected exports of butterfat products will more than offset expected declines in cheese exports. Skim-solids basis import forecasts for 2018 and 2019 are unchanged from the previous month. However, skim-solids basis exports for 2018 and 2019 are reduced from the previous month primarily on lower expected exports of skim milk powder and whey products as China’s tariffs on certain U.S. dairy products hampers exports to some extent.
The 2018 butter, cheese, nonfat dry milk (NDM), and whey price forecasts are reduced from the previous month. Forecasts are reduced for cheese, NDM, and whey prices for 2019 as cheese stocks will remain large and prices for NDM and whey will have to remain competitive with competing exporters. However, the 2019 butter price is raised as stocks are worked down. The 2018 and 2019 Class III price and Class IV price forecasts are lowered from last month. The 2018 all milk price is forecast at $15.95 to $16.25 and the price for 2019 is $16.25 to $17.25 per cwt.