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Russell Nemetz Another Record Year for Meat Production Forecast for 2019
by Russell Nemetz, click here for bio

Program: Land & Livestock Report
Date: February 27, 2019

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U.S. meat production continued to climb to record levels in 2018 and that trend will continue in 2019.

Total red meat and poultry production grew 2% to a record 102.4 billion pounds last year, and USDA expects these categories to increase by 2% again in 2019, to reach a new record of 104.7 billion pounds. These projections were released early Friday in USDA's outlook for livestock and poultry, at the agency's annual Agricultural Outlook Forum in Arlington, Virginia.

This steady rise in production kept cattle, hog and turkey prices lower last year, as well as broiler prices, which rose briefly in the first half of the year before dropping in the second half. USDA expects prices for cattle and turkey to rise in 2019, but hog and broiler prices are forecast to drop lower. Exports for 2019 are expected to increase for all the major commodities, but pork growth may be held back by ongoing trade disputes.

CATTLE & BEEF

The government shutdown in January has delayed USDA's January Cattle report, which forced the agency to rely on inventory estimates from July 2018, and current herd estimates are not available at this time.

As of July, the 2018 calf crop was estimated at 36.5 million head, 2% up from 2017, and the largest calf crop since 2007. Although herd expansion continued in 2018, there are indications that is slowing. Producers indicated that they were retaining fewer heifers, and higher levels of beef cow slaughter were reported through much of the year.

Commercial beef production for 2019 is forecast to increase by 3% to 27.61 billion pounds, which broke the previous record for production set in 2002. Total commercial cattle slaughter is expected to rise in 2019 by nearly 1%.

Beef exports are forecast to have increased by 11% for 2018, with competitive U.S. beef prices and global demand holding steady. For 2019, exports are expected to rise 2% to reach 3.26 billion pounds. USDA predicts U.S. exports will face higher prices in 2019, but drought and flooding in Australia may limit competing supplies.

Beef imports are expected to reach 3.01 billion pounds, just barely up from 2018 levels. The 5-Area steer price for 2018 is expected to average $115 to $122 per cwt, up slightly from 2018. Cow-calf operators and backgrounders will likely see lower prices in 2019, given higher projected feed prices and large supplies of cattle in feedlots. Feeder steer prices are forecast to average $141 to $148 per cwt, compared to $147 in 2018.

PORK

Hog producers continue to expand herds, despite lower returns. Several new plants opened up in the last two years, which has added capacity and allowed producers to take advantage of expectations of strong demand.

Hog inventory for 2018 was pegged at 74.6 million head, up 2% from 2017, and the largest inventory since 1943. The breeding herd was 2% higher as well, topping out at 6.3 million head. The large pig crops from second half 2018 and the first half of 2019 are expected to result in a record numbers of hogs marketed for slaughter in 2019. U.S. hog imports are forecast at 4.2 million head for 2019, just barely down from 2018.

Commercial pork production is forecast to reach a record level of 27.34 billion pounds in 2019, up 4% from 2019. Despite these expected record-high slaughter numbers, the recent expansion of slaughter capacity should absorb this growth, USDA said.

Pork exports increased in 2018, with low prices and increased global economic growth overriding the effect of tariffs and trade disputes. Exports are forecast to increase 6% again in 2019, to 6.3 billion pounds. Pork imports declined 5% in 2018, thanks to rising pork production and low domestic pork prices, which made the U.S. market less competitive abroad. This trend is expected to continue in 2019, with pork imports forecast to drop slightly to 1.06 billion pounds.

U.S. hog prices are forecast to average $41 to $44 per cwt for 2019, down from $46 on average last year.

POULTRY & EGGS

Broiler meat production is expected to rise 1% to a record 43.1 billion pounds. Due to the government shutdown, current flock size estimates are not available, but at the beginning of December 2018, flocks were 1% larger than 2017. Given weak profit margins expected in 2019, flock expansion is unlikely, USDA said.

Broiler meat exports are forecast to increase 1% to 7.15 billion pounds, and USDA expects prices to average $0.94 to $1 per pound, compared to an average of $0.98 per pound in 2018.

Turkey production for 2019 is forecast to reach 5.92 billion pounds, after a decline in 2018. The national turkey hen price is expected to average $0.83 to $0.88 per pound, up from an average of $0.80 in 2018.

The total U.S. egg production is set to reach record heights in 2019, with 9.13 billion dozen eggs expected, up 2% from 2018. As of Dec. 1, 2018, the table layer flock was 33.1 million birds, up 3% from 2017. Although weaker egg prices and higher feed costs may hamper profits in 2019, USDA expected producers to continue flock expansion.

Egg prices are forecast to average $1.22 to $1.29 per dozen, down from $1.38 average for 2018.

Source: DTN

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