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Challenging Year for Livestock Production

by 5m Editor
25 April 2008, at 12:00am

The livestock and poultry industry in the US will be increasingly challenged this year by rising feed prices that drive up costs and lower returns, and by consumers confronted with uncertain economic conditions.

Speaking at the US Agricultural Outlook Forum earlier this year Joel Greene , the livestock analyst with the World Agricultural Outlook Board of the USDA, said that there will be a record 93 billion pounds of red meat and poultry to move through domestic and international channels this year.

He said that the country's economic growth was at its weakest during the first half of the year and is expected to fall by between one and two per cent over the year.

He said he expected to see a change in consumer patterns as the weaker economy produced reduced confidence. This could see US consumers eat out less and turn to cheaper cuts of meat.

While the slowing in economic growth is expected around the world Mr Greene said that internationally it is expected to be about three per cent.

"US red meat and poultry exports will continue to be supported by a weak US dollar, and are expected to top 12 billion pounds this year," Mr Greene told the forum.

"Returns for livestock and poultry producers will fall during the year, and as a result production growth for all red meat and poultry slows later in the year."

He said that as carcase weights have increased in recent years, but this year the rise in weights is not expected to be as great as pig and poultry producers in particular strive to reduce feed costs.

Cattle producers are expected to leave cattle on grass longer if pasture conditions permit in order to offset some of the increased feed costs.

Mr Greene said that prices for cattle, hogs, and poultry in 2008 are expected to decline, but retail prices for beef and pork are expected to rise, although broiler and turkey prices could be slightly lower.

Total US Red Meat and Poultry Production

End of Positive Returns

For nearly four years US pig producers have had a series of positive returns, but this came to an end at the end of 2007.

According to Iowa State University estimated returns for hog farrow-to-finish operations have been negative since October, Mr Greene said.

"During this long run of positive returns, sows farrowing growth was very modest and producers did not start to boost sows farrowing until the first half of 2007," he said.

The December 2007 Quarterly Hogs and Pigs report estimated the inventory of all hogs and pigs was about 65.1 million head, about four per cent higher than 2006.

However, he said the breeding herd was only about one per cent higher at nearly 6.2 million head.

"Expansion in the hog industry continues to be driven by productivity gains," said Mr Greene.

"Pigs per litter jumped up to 9.24 head for the September-November quarter, an increase similar to the June-August quarter. Growth in pigs per litter had been well under one per cent over the last couple years, but over the last three quarters, the year over growth rate has risen to about 1.4 per cent."

He said that the growth of litter numbers can be put down to the successful vaccinations for Circovirus that was killing a significant number of pigs.

For 2008, producers intend to farrow two per cent more sows in December-February and then slightly more in March-May than last year, he told the forum.

The higher numbers in the litters will increase the numbers sent for slaughter, which is expected to rise by three per cent.

US Hog Inventory to Rise

Pork Export Rise to Continue

Imports of hogs are expected to reach 10.8 million head in 2008 and increase on the 10 million in 2007.

US imports of Canadian hogs were strong the last half of 2007, and combined with expected shipments this year, about 1.5 million more Canadian hogs will be available for slaughter here in 2008.

"The Canadian hog industry has been hit hard by the strong Canadian dollar and rising feed costs, and the Canadian hog inventory on January 1, 2008 plunged six per cent to 14 million head, the lowest Canadian hog inventory since 2001," Mr Greene said.

He said that US hog imports are expected to drop below the levels of last year by the second half of the year.

Pork production is forecast at a record 23 billion pounds, five per cent higher than 2007.

Pork output during 2007 rose by four per cent to a record 21.9 billion pounds. This was the seventh year in succession that production increase but it was also the first year since 1989 that the average weight of the slaughter pigs did not rise.

Mr Greene said that with feed costs even higher this year, average hog weights are expect to remain flat in 2008.

US hog prices, on a national base, 51 per cent-52 per cent lean, live equivalent, are forecast at $41 to $43 per cwt.

Pork exports this year are expected to rise for the 18th consecutive year to a record 3.7 billion pounds, almost 17 per cent higher than 2007's 3.1 billion pounds.

Through the first half of 2007 accumulated pork exports were nearly four per cent below the previous year and it appeared a long string of records was threatened. But in the second half of the year foreign buying picked up and pork exports were over 13 per cent higher.

Exports were a record 1.1 billion pounds to Japan, as well as record high to Canada, Russia, and China.

Pork imports for 2008 are expected to be 965 million pounds, slightly lower than 2007 when they reached 969 million pounds.

Canada is the largest provider of pork to the United States but increased Canadian exports of hogs likely came at the expense of pork shipments. A similar situation this year dampens prospects for pork imports.

US Pork Export Rise Continues

Further Reading

More information - You can read Joel Greene's full report by clicking here.

April 2008