20151215-USDA-USDA_Livestock,_Dairy,_and_Poultry_Outlook_2015.12.15_27页_1mb

Summary of Livestock, Dairy, and Poultry Outlook (LDP-M-258, Dec. 15, 2015)

Core Content

This report outlines the expected trends in U.S. livestock, dairy, and poultry markets for 2016, based on USDA forecasts and analysis of supply, demand, and trade dynamics. It highlights the anticipated decline in prices across various segments due to factors such as increased supply, weak global demand, and trade restrictions.

Main Points

Beef/Cattle

• Prices: Cattle, fed and feeder prices are expected to decline significantly in 2016. Fed steer prices are projected to be $128–134 per cwt in Q1 2016, down over $30 year-over-year.
• Supply: High volumes of heavy fed cattle leaving feedlots, combined with increased cold storage stocks and Australian imports, are putting downward pressure on prices.
• Trade: U.S. beef exports to key markets like Japan and Mexico have been affected by weak global demand and the strong U.S. dollar. Australia's beef exports to the U.S. declined sharply in October, but U.S. production is expected to rise in 2016, potentially improving export competitiveness.
• Weather Impact: El Niño is expected to bring more rain and cooler temperatures to the Southern Plains, which could influence cattle production and feedlot conditions.

Pork/Hogs

• Prices: Hog prices are expected to be more than 30 percent lower in 2016 compared to 2015, driven by strong production and weak demand.
• Production: Fourth-quarter 2015 pork production is forecast at 6.5 billion pounds, a 6 percent increase over 2014.
• Exports: U.S. pork exports in October were 7 percent higher than in 2014, but the forecast for fourth-quarter exports was reduced to 1.275 billion pounds. China-Hong Kong is the largest importer, but its demand for U.S. pork has declined year-over-year.
• Market Trends: The feed spread remains positive, indicating that hog producers are still profitable, despite lower prices.

Poultry

• Production: Broiler production is forecast to be 40.9 billion pounds in 2016, a reduction due to industry adjustments following HPAI outbreaks. October production was down 6 percent compared to 2014.
• Prices: Broiler prices are expected to rise steadily in 2016, reaching 85–93 cents per pound by Q3. Egg prices spiked in November to $2.09 per dozen but are forecast to fall in the first part of 2016.
• Trade: Broiler and turkey shipments in October were down significantly compared to the previous year. Exports to Mexico, China, and other countries have been impacted by trade restrictions and the strong dollar.

Dairy

• Prices: All-milk prices are forecast to decline by about 5 percent in 2016, from $17.70–17.90 per cwt in Q4 2015 to $15.95–16.75 per cwt in 2016.
• Production: Milk production is forecast to decrease by 0.5 billion pounds in 2016, due to productivity gains and high beginning stocks.
• Exports: Dairy exports are expected to decline by 0.4 billion pounds (milk-fat equivalent) and 0.8 billion pounds (skim-solids equivalent) in 2016.

Key Information

• Price Declines: Prices for cattle, hogs, poultry, eggs, and milk are expected to be lower in 2016 than in 2015.
• Supply Factors: Increased production and supply levels are a primary cause of lower prices, especially for cattle and hogs.
• Trade Restrictions: HPAI outbreaks have led to reduced poultry exports and increased cold storage stocks.
• Global Demand: Weak global demand for U.S. beef and pork, along with strong U.S. dollar, has negatively impacted export volumes.
• Weather and Climate: El Niño is expected to influence cattle production and feedlot conditions in the Southern Plains.
• Market Volatility: Prices for fed cattle and broilers are expected to remain volatile due to supply and demand imbalances.
• Producer Adjustments: Producers are adjusting production levels in response to price weakness and trade issues, with some expected to increase output in 2016.

Outlook

• 2016 Forecast: Prices are expected to gradually stabilize as supply levels adjust, and export markets may improve.
• Cold Storage: Continued high cold storage levels are contributing to downward pressure on prices, particularly for beef and poultry.
• Dairy Market: The dairy market is expected to see a decrease in production and export volumes, leading to lower all-milk prices.
• Trade Policy: The WTO ruling on U.S. COOL requirements may lead to potential retaliatory measures from Canada and Mexico, affecting U.S. exports.

Tables and Data Sources

• Red Meat and Poultry: USDA forecasts show significant year-over-year declines in production and prices.
• Dairy Forecast: All-milk prices are expected to fall in 2016, with reduced production and export volumes.
• Data Sources: USDA, World Agricultural Supply and Demand Estimates, and other official reports provide the basis for these forecasts.

Web Sites and Contacts

• Animal Production and Marketing Issues: USDA provides detailed reports and data on livestock and poultry production and trade.
• Contacts:
  • Kenneth Mathews: kmathews@ers.usda.gov
  • Mildred Haley: m Haley@ers.usda.gov