20180718-USDA-Livestock,_Dairy,_and_Poultry_Outlook_30页_2mb

Summary of Livestock, Dairy, and Poultry Outlook (July 18, 2018)

Core Content

This report provides an outlook on the utilization growth of U.S. livestock, dairy, and poultry commodities for 2019, breaking down the growth into components such as domestic disappearance, exports, ending stocks, and hatching use. The forecast indicates growth in utilization across all seven commodities, with beef (+2.1%), pork (+3.5%), lamb (+2.3%), broilers (+2.0%), turkey (+0.3%), eggs (+1.7%), and milk (+1.1%). The main driver of this growth is higher domestic disappearance, with exports also playing a significant role for some commodities.

Key Trends and Forecasts

• Beef:

  • 2018 beef production forecast was raised by 25 million pounds to 27.2 billion pounds due to increased cow and bull slaughter.
  • 2019 production forecast was reduced by 25 million pounds to 27.7 billion pounds due to lower anticipated steer and heifer slaughter.
  • Feeder cattle prices increased for 2018 and 2019, with forecasts raised to $134-$145/cwt for 2018 and $136-$148/cwt for 2019.
  • Beef exports increased significantly in 2018, reaching 3.070 billion pounds, with strong demand from Asian markets, especially South Korea.
  • Cattle exports also rose in May 2018, driven by lower feeder cattle prices in the U.S. compared to Canada.

• Dairy:

  • Dairy product prices declined in June and July 2018, with cheddar cheese and butter prices dropping notably.
  • The all-milk price forecast for 2018 was lowered to $15.95-$16.25 per cwt, and for 2019 to $16.25-$17.25 per cwt.
  • Milk production for 2018 is forecast at 217.9 billion pounds, with a slight decrease in milk per cow to 23,170 pounds.
  • Milk cow numbers are expected to contract slightly in 2019 to 9.395 million head.
  • Ending stocks are projected to rise, especially for butter and cheese, due to weak demand and high stock levels.
  • China's new 25% tariffs on U.S. dairy products, including NDM/SMP and whey, are expected to reduce export volumes.

• Pork/Hogs:

  • Pork production is forecast to increase significantly in the second half of 2018 and the first half of 2019, driven by record-high inventories and litter rates.
  • Hog prices are expected to remain below year-earlier levels due to increased supply and export challenges.
  • The U.S. breeding inventory increased by over 200 thousand head in 2018, with notable growth in Illinois and South Dakota.
  • Pork production for 2018 is expected to reach 6.5 billion pounds in Q3 and 7.2 billion pounds in Q4, both up by more than 6% year-over-year.
  • 2019 production forecast is 6.8 billion pounds in Q1 and 6.7 billion pounds in Q2, indicating continued growth.

Major Views

• Utilization Growth: Across all commodities, utilization is expected to grow in 2019, with domestic disappearance being the primary factor.
• Export Dynamics: Exports are a key growth component for beef, pork, and broilers, but are expected to decline for milk and turkey. For turkey, lower exports are likely offset by increased domestic disappearance and stocks.
• Tariffs Impact: New tariffs from China and Mexico are expected to negatively affect U.S. dairy exports, particularly NDM/SMP and whey products, leading to lower price forecasts.
• Feed Prices: Feed prices for 2018/19 are projected to be lower than previous forecasts, with corn at $3.30-$4.30 per bushel and soybean meal at $315-$355 per short ton.
• Stock Levels: High stock levels are expected for dairy products, especially butter and cheese, due to weak domestic demand and strong export competition.

Key Information

• Utilization Growth:

  • Beef: +2.1%
  • Pork: +3.5%
  • Lamb: +2.3%
  • Broilers: +2.0%
  • Turkey: +0.3%
  • Eggs: +1.7%
  • Milk: +1.1%

• Export Trends:

  • Beef exports to Asia, particularly South Korea, saw strong growth.
  • Cattle exports to Canada increased significantly in May 2018.
  • Milk and turkey exports are expected to decline, with turkey exports down for the first time in 8 months in May.

• Market Conditions:

  • Drought conditions in the Great Plains and intermountain region influenced cattle placements and feedlot operations.
  • The U.S. dairy market faces challenges from new tariffs and global competition, impacting export volumes and prices.

• Production Forecasts:

  • 2018 beef production: 27.2 billion pounds
  • 2019 beef production: 27.7 billion pounds
  • 2018 pork production: 6.5 billion pounds in Q3, 7.2 billion pounds in Q4
  • 2019 pork production: 6.8 billion pounds in Q1, 6.7 billion pounds in Q2

• Stock Forecasts:

  • 2018 milk ending stocks: 13.5 billion pounds
  • 2019 milk ending stocks: 12.5 billion pounds
  • 2018 butter and cheese stocks: High due to weak demand and high supply
  • 2019 butter and cheese stocks: Expected to remain high, with slight increases

• Tariff Impact:

  • China's 25% additional tariffs on U.S. dairy products will affect NDM/SMP, whey, and cheese exports.
  • Mexico also imposed tariffs on U.S. cheese, increasing the competitive challenge for U.S. producers.

• Feedlot and Cattle Management:

  • Strong feedlot placements in May 2018 were influenced by drought conditions.
  • Feeder cattle prices were higher in the first half of 2018, with projections for continued support in 2019 due to lower feed inputs.

Conclusion

The report highlights a mixed outlook for U.S. livestock, dairy, and poultry sectors in 2019. While utilization is expected to grow across most commodities, the impact of tariffs and global competition will likely pressure export volumes and prices, particularly for dairy. Domestic demand remains weak for some products, contributing to higher stock levels. The overall trend suggests a cautious outlook, with adjustments in production and pricing based on market conditions and external factors such as tariffs and drought.