The charts below show the latest forecasts from the monthly WASDE report as well as changes made to earlier forecasts for beef and pork.

Some of the Highlights:

Beef: USDA lowered its forecast for beef production in 2015 by 125 million pounds and currently pegs beef output for next year at 23.736 billion pounds, down 3.2 per cent compared to 2014 levels.

Beef production has been steadily declining in recent years while at the same time we have had a significant recovery in US economic conditions and a resurgence in demand for meat protein.

We continue to see arguments out there that the surge in cattle/beef prices somehow represents a speculative bubble ready to collapse. We think recognising the dramatic decline in beef availability at a time when consumers both in the US and abroad want more of it is a more convincing argument as to why prices are so high.

In 2010, beef production was 26.304 billion pounds. The latest USDA forecast is that next year production will be about 2.5 billion pounds (-10 per cent) lower. On a per capita basis, beef availability is currently forecast to be down 12 per cent compared to what it was just five years ago.

Current record high cattle prices are sending a signal to consumers to change how they consumer beef (eat/ waste less) and they also are sending a signal to producers to ramp up production.

Unfortunately, bringing more beef to market is a multi year process with significant structural issues in the way.

Pork: USDA reduced its projections for pork production next year by some 305 million pounds (-1.3 per cent).

The reduction likely reflects a recognition that even as PEDv impact may ease, we could continue to see residual effects this winter.

Carcass weights next year will likely be steady to maybe even lower than in 2014, thus the increase in production will have to come from more pigs coming to market.

USDA still expects US pork output next year to be up 4.2 per cent compared to 2014 levels and slightly higher than in 2013.