20161215-USDA-USDA_Livestock,_Dairy,_and_Poultry_2016.12.15_18页_819kb

Summary of Livestock, Dairy, and Poultry Outlook (LDP-M-270, Dec. 15, 2016)

Core Content

This report provides an overview of the U.S. livestock, dairy, and poultry markets, focusing on production, prices, exports, and market outlook for the remainder of 2016 and into 2017. It includes data on cattle, dairy, hogs, and poultry, and discusses the impact of exchange rates, domestic demand, and global supply and demand dynamics on these sectors.

Key Information and Main Points

Export Trends

• U.S. Animal Proteins: Export shares have increased despite a stronger U.S. dollar, mainly due to lower domestic prices from supply increases and growing foreign demand.
• Beef Exports:
  • October 2016 exports reached 229 million pounds, up 17% year-over-year.
  • Japan, South Korea, Mexico, Hong Kong, and Canada accounted for ~80% of exports.
  • U.S. beef exports are forecast to increase to 670 million pounds in the fourth quarter of 2016.
  • Fourth-quarter imports are expected to rise to 645 million pounds, with a 10% annual decline.
• Pork Exports:
  • October 2016 exports hit 451 million pounds, up 9% year-over-year.
  • Mexico, Japan, Canada, and South Korea were the top markets.
  • China remained a significant market, though import growth has likely plateaued.
• Poultry Exports:
  • October exports for all three poultry commodities were above last year but declined from September levels.
  • Broiler, turkey, and egg exports showed mixed performance, with some commodities seeing higher forecasts.

Production and Prices

• Cattle/Beef:
  • Cattle placements in October 2016 were 5% lower than the previous year, likely slowing production growth in the first half of 2017.
  • Beef production is expected to increase by 3% in the first half of 2017 due to slaughter-ready supplies.
  • Cattle prices are projected to be 18% lower in the first half of 2017 compared to 2016.
  • Retail beef prices have been declining, reaching $5.74 per pound in October.
• Dairy:
  • Milk production in October 2016 was 2.5% higher than in October 2015.
  • Milk per cow increased by 42 pounds, with 9.34 million milk cows.
  • Fourth-quarter 2016 all-milk price forecast is $17.05-$17.25 per cwt, up from $16.80-$17.10.
  • Dairy product price forecasts for 2017 have been raised due to strong domestic demand and higher exports of nonfat dry milk and lactose.
• Pork/Hogs:
  • Fourth-quarter 2016 hog slaughter was higher than the previous year, with record weekly numbers.
  • Slaughter weights were lower year-over-year, suggesting producers were prioritizing space over maximizing profit.
  • Fourth-quarter 2016 pork production is expected to be 6.6 billion pounds, up 2.6%.
  • Live equivalent lean hog prices are forecast at $35-$36 per cwt for the fourth quarter.
• Poultry:
  • October broiler production was down slightly due to one less slaughter day, but bird weights were higher.
  • Broiler prices increased in November, reaching 84 cents per pound.
  • Turkey production was down 1.5% year-over-year, with lower bird weights and a revised fourth-quarter forecast.
  • Egg prices on the New York wholesale market showed a strong late-season increase, reaching 104 cents per dozen.

Market Outlook

• Beef:
  • Fourth-quarter 2017 beef production is expected to be 6.2-6.3 billion pounds.
  • Beef prices are expected to be more than 18% lower in the first half of 2017.
  • Fourth-quarter 2017 beef exports are forecast at 670 million pounds, up 13% from the previous year.
• Dairy:
  • 2017 milk production is forecast at 216.8 billion pounds, a 0.2 billion pound reduction from previous forecasts.
  • All-milk price forecast for 2017 is $16.85-$17.65 per cwt, up from $16.30-$17.20.
• Pork:
  • 2017 pork production is expected to increase slightly, with lean hog prices at $35-$36 per cwt.
  • Export forecasts for 2017 on a skim-solids basis are 40.1 billion pounds, up 0.4 billion pounds from the previous month.
• Poultry:
  • Fourth-quarter poultry production forecasts were revised downward for broilers and turkeys.
  • Egg production is forecast to increase, with prices expected to trend lower in 2017.

Exchange Rate Impact

• A stronger U.S. dollar has made U.S. animal proteins more expensive in foreign markets, reducing demand.
• However, lower domestic prices have offset some of the negative effects.
• Currency depreciation in Canada and Mexico has increased the competitiveness of U.S. beef imports from these countries.

Supply and Demand Dynamics

• Cattle: Increased slaughter-ready supplies and higher dressed weights support production growth.
• Dairy: Strong domestic demand, increased exports, and lower milk production contribute to higher price forecasts.
• Pork: Steady demand, particularly for hams, picnics, and butts, has supported prices despite high supply.
• Poultry: Production and prices are influenced by seasonal trends and export performance.

Forecast Dates

• Tables will be released on December 27, 2016.
• The next Outlook Report is scheduled for January 19, 2017.

Contacts and Sources

• Authors: Mildred Haley, Keithly Jones, William Hahn, Jonathan Law, Jerry Cessna
• Contact: mhaley@ers.usda.gov, kjones@ers.usda.gov, whahn@ers.usda.gov
• Sources: USDA Economic Research Service, Agricultural Marketing Service, World Agricultural Outlook Board, Federal Reserve Bank, Global Trade Atlas Navigator.