Slow growth forecast for meat production, consumption

By staff reporter

- Last updated on GMT

Related tags Cent Meat

US red meat and poultry production in 2007 is projected to grow at
a considerably slower rate than expected this year, while
consumption is expected to increase marginally, according to an
agriculture department forecast.

The report helps food processors anticipate changes in supply and prices in the future as the market adjusts to variables in production and demand.

Prices for beef and all classes of cattle, except cows, have been declining in response to heavy supplies of all meats - beef, pork, and poultry - and record inventories of cattle on feed.

The falling prices has been good for processors and is likely to be sustained in the beef sector.

The US Department of Agriculture (USDA) forecasts increases of about two per cent in the production of red meat and poultry next year. Egg production will likely increase by slightly more than one per cent, while milk production is expected to grow by slightly less than one per cent, the department stated.

The USDA forecasts total per capita consumption of red meats and poultry in 2007 at 225.6 pounds, an increase of less than one per cent from the 2006 forecast. Per capita egg consumption expected next year is 260.3 eggs, less than one percent above forecast per capita consumption this year of 258.6.

In the beef market, a larger US cattle herd, rising domestic beef production and lower prices are trends currently affecting supplies. Beef exports for 2007 are to increase to 1,320 million pounds, a rise of 42 per cent over the 2006 forecast total but still only 52 per cent of the pre-BSE record set in 2003, the department forecasts.

A weaker dollar, rising US beef production, lower beef prices, and continued growth in re-established markets all support the expansion of exports.

Despite abundant supplies of beef, markets are signaling there are inadequate supplies of higher quality beef, the department noted Fed cattle are having trouble reaching the higher grades. Fed cattle prices are declining with competition from other meats, although cow prices are relatively stable.

Total 2006 US beef exports are pegged at 930 million pounds, down from last month, mainly reflecting the delay in resumption of exports to Japan due to BSE.

The department slightly raised its beef import forecast for 2006 to 3,510 million pounds, as imports from Australia in the first quarter were significantly higher than a year ago.

In 2007, beef imports are pegged at 3,340 million pounds, down 4.8 per cent from the 2006 forecast, mainly reflecting a larger US cattle inventory, rising domestic beef production and lower beef prices.

In the dairy sector the department forecasts milk production to rise only moderately in 2007, due to sharply lower prices for milk and milk products this year.

Commercial use on both fat and skim solids basis will be higher in 2006 compared with 2005. Prices for milk and milk products, with the exception of dry whey, will be lower this year than in 2005, the report stated.

In the sheep segment, the national herd is expected to post a third consecutive year of increase in 2007. Due to the increased inventory, production in 2007 is expected to increase slightly by about 3.5 per cent. Slaughter lamb prices are expected to recover from 2006 lows. This recovery could be dampened by the increased supply on the market.

Lamb imports have been fairly stable for the past two years, and 2007 imports are expected to increase by less than one per cent to about 184 million pounds.

US pork production is expected to increase about two per cent next year, to 21.7bn pounds. Exports will continue to be a major component of demand for US pork and a critical determinant of the sector's financial health, the department stated.

Exports are expected to increase by five per cent next year, to three billion pounds, largely on favorable values of the US dollar relative to international competitors.

Prices of 51 to 52 per cent lean hogs in 2007 are expected to average between $39 and $42 per hundredweight (cwt).

In the poultry sector the department expects production to continue to increase in 2007, although the rate of growth is expected to be less than in recent years.

Broiler production is forecast at 36.8 billion pounds, with turkey production estimated at 5.7 billion pounds.

The expected rise in corn prices and large supplies of total meat products are expected to dampen any incentive to strongly expand production. However, general economic indicators such as real gross domestic product and per capita disposable income are forecast to continue to increase.

US broiler and turkey exports in 2007 are expected to be about 5.4 billion pounds and 620 million pounds, respectively. First-quarter 2006 broiler exports totaled 1.338 billion pounds, considerably higher than previously estimated, the department reported.

"It is likely that low prices for leg quarters spurred large purchases that more than offset lower shipments to areas with avian influenza concerns,"​ the department stated in the report.

Broiler exports this year are expected to total 5.5 billion pounds. Russia reportedly resumed re-licensing for poultry meat and poultry products on May 5, 2006, under a new system, after canceling all poultry import permits on April 27.

Turkey exports in the first quarter 2006 were 119 million pounds, more than five per cent lower than the first quarter 2005. The US is forecast to export 575 million pounds of turkey this year, down slightly from 2005.

In the egg segment of the market, the layer flock averaged a record, pushing egg production up and prices down in the first quarter 2006. However, as supplies come closer to demand, prices are expected to rebound, ending 2006 higher than 2005.

In 2007, egg production will increase 1.4 per cent, and prices are expected to go up six to eight per cent due to higher feed costs, the department anticipates.

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