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Summary of Livestock, Dairy, and Poultry Outlook (ERS Report, Feb. 16, 2016)

Core Content Overview

This report provides a comprehensive outlook for the U.S. livestock, dairy, and poultry sectors for 2016, including inventory trends, price forecasts, production expectations, and trade dynamics.

Cattle/Beef

Inventory Trends

• U.S. cattle inventory on January 1, 2016, increased by 3% year over year.
• Heifers entering the cow herd in 2015 were 8% higher than in 2014.
• 63% of heifers from 2015 were retained in the 2016 cow herd, leading to a 3% annual increase in the national aggregate cow inventory.
• Cattle on feed in 1,000-plus-head feedlots declined by 7%, while steers on feed increased by 3%.
• Feeder cattle supplies outside feedlots are expected to rise by over 5%, likely dampening price increases in 2016.

Price Forecasts

• Steer prices are forecast to average $133–$142/cwt, down from $148.12/cwt in 2015.
• First-quarter 2016 steer prices are projected to be $131–$135/cwt, down over $29 from 2015.
• Beef cutout values (Choice and Select) declined from mid-January highs, with Choice at $221.84/cwt and Select at $217.26/cwt as of February 5, 2016.
• All-fresh retail beef prices continued to decline, with December 2015 prices at $5.89/lb, down 10 cents from November.
• Ground beef demand remained sluggish, contributing to lower retail prices.

Trade Outlook

• Beef exports are expected to increase to 2.47 billion pounds in 2016, while imports are projected to fall to 2.85 billion pounds, a 16% decline from 2015.
• Beef exports to Mexico are forecast to rise, while Japan saw a 19% drop in 2015.
• Australia and Uruguay were major contributors to the 2015 import increase, with Australia up 16% and Uruguay up 49%.
• The strong U.S. dollar in 2015 made imports more attractive, but 2016 is expected to see reduced import demand due to higher domestic production.

Dairy

Inventory and Production

• U.S. dairy cow inventory on December 31, 2015, was 9,315 head, with a 40,000-head increase from 2015.
• Milk production in 2016 is forecast at 211.9 billion pounds, up 0.1 billion pounds from the previous month’s forecast.
• Milk per cow in December 2015 was 1,872 pounds, a 0.4% increase from 2014.

Price Forecasts

• All-milk price forecast for 2016 is $15.30–$16.00 per cwt, down from $15.35–$16.15 per cwt last month.
• Butter prices are forecast to rise to $1.990–$2.090 per pound due to strong domestic demand.
• Cheese prices are narrowed to $1.550–$1.620 per pound.
• Nonfat dry milk (NDM) and dry whey prices are forecast to be $0.775–$0.835 per pound and $0.230–$0.260 per pound, respectively.
• Class III and IV milk prices are forecast to decline, contributing to the lower all-milk price outlook.

Trade Outlook

• Commercial export forecasts for 2016 have been reduced by 0.3 billion pounds (milk-fat basis) and 0.7 billion pounds (skim-solids basis).
• China and Russia remain weak in import demand, with the Russian trade ban still affecting the market.

Sheep/Lamb

Inventory Trends

• U.S. sheep and lamb inventory on January 1, 2016, increased by 1% year over year.
• Texas, Montana, and Colorado saw increases, while California, Nevada, and Oklahoma experienced declines, partly due to drought conditions.
• Replacement lambs 1 year or older increased by 15,000 head, contributing to the overall inventory growth.

Production and Trade

• 2015 lamb and mutton production was 150.2 million pounds, down 5.4 million pounds from 2014.
• 2016 first-quarter lamb and mutton production is expected to be 39 million pounds, up 4% from the same period in 2015.
• Lamb and mutton imports in 2015 were 214 million pounds, up 10% from 2014.
• 2016 first-quarter imports are forecast to be 55 million pounds, up 4% from 2015.

Pork/Hogs

Inventory and Production

• First-quarter hog slaughter is expected to be slightly higher, leading to a 70 million-pound increase in pork production.
• Live hog prices are forecast to be $43–$45 per cwt, down 9% from 2015.
• Most hog facilities are likely operating at breakeven or below due to low prices and production costs.

Trade Outlook

• December 2015 pork exports increased by 9%, contributing to a 1.7% year-over-year rise in total exports.
• Mexico became the largest foreign destination for U.S. pork in 2015, surpassing Japan in volume.
• Japan remained the largest in value, with an average unit price of $1.33 per pound, versus Mexico’s $0.72 per pound.
• South Korea reinstated restrictions on uncooked poultry exports, leading to a 85 million-pound reduction in broiler exports for 2016.

Poultry

Production Forecasts

• Broiler meat production for the first quarter is forecast at 10.025 billion pounds, up due to higher egg set and chick placements.
• Turkey meat production for 2016 is expected to reach 5.9 billion pounds, up 6% from 2015, but 75 million pounds below the previous month’s estimate.
• Table egg production is forecast to increase by 4%, reaching 7 billion dozen, driven by rebuilding flocks after HPAI losses in 2015.
• Hatching egg production is expected to rise to 1.1 billion dozen, up 2% from 2015.

Price Forecasts

• Whole broiler prices are forecast to be lower in the first quarter but unchanged for the rest of 2016.
• Whole hen turkey prices in January 2016 averaged $1.15 per pound, up 16% from 2015.
• Table egg prices are expected to be below 2015 levels throughout 2016, with New York wholesale prices forecast at $1.36–$1.40 per dozen, down 6% from 2015.

Poultry Trade

• December 2015 shipments of broiler, turkey, and egg products declined compared to 2014.
• Broiler shipments fell by 15% to 478 million pounds.
• Turkey shipments dropped 39% to 44 million pounds.
• Egg and egg product exports totaled 23 million dozen, a 55% decrease from the previous year.
• 2016 broiler exports are forecast to be 6.765 billion pounds, down from 6.3 billion pounds due to HPAI-related restrictions.

Key Information Summary

• Cattle inventory increased by 3%, with a 4% rise in beef production expected due to higher carcass weights and marketings.
• Beef prices are projected to fall, with steers at $133–$142/cwt and cutout values declining from mid-January highs.
• Beef exports are expected to rise in 2016, while imports are projected to fall by 16%.
• Dairy prices are forecast to decline, with all-milk prices at $15.30–$16.00 per cwt and butter prices at $1.990–$2.090 per pound.
• Sheep and lamb inventory increased for the second consecutive year, with Texas, Montana, and Colorado leading the growth.
• Pork production is expected to rise in 2016, but hog prices remain low, with $43–$45 per cwt.
• Poultry production is forecast to increase, with broiler meat up 4% and turkey meat up 6%.
• Table egg production is expected to grow by 4%, reaching 7 billion dozen in 2016.

Tables and Data Sources

• Red Meat and Poultry and Dairy Forecast tables will be released on Feb. 29, 2016.
• Data Products:
  • Meat Price Spreads
  • Livestock and Meat Trade Data
  • Livestock & Meat Domestic Data
  • Dairy Data

Contacts and Links

• Ken Mathews – Cattle/Beef coordinator, contact: kmathews@ers.usda.gov
• Sahar Angadjivand – Beef/cattle and veal, contact: sangadjivand@ers.usda.gov
• Seanicaa Edwards – Beef/cattle trade
• Alex Melton – Poultry trade, contact: awmelton@ers.usda.gov
• Mildred M. Haley – Hogs/pork coordinator, contact: mhaley@ers.usda.gov
• David J. Harvey – Poultry, eggs, aquaculture, contact: djharvey@ers.usda.gov
• Sean Ramos – Poultry, eggs
• Roger Hoskin – Dairy, contact: rhoskin@ers.usda.gov
• Jerry Cessna – Dairy
• Carolyn Liggon – Web publishing, contact: cvliggon@ers.usda.gov

Subscription and Resources

• Subscribe to ERS e-mail notification service at http://www.ers.usda.gov/subscribe-to-ers-e-newsletters.aspx
• Purchase printed copies from the USDA Order Desk at 1-800-363-2068 (specify issue number or series SUB-LDPM-4042)
• Access Livestock, Dairy, and Poultry Outlook at http://www.ers.usda.gov/publications/ldpm-livestock,-dairy,-and-poultry-outlook.aspx