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Economic Outlook for Livestock, Dairy, and Poultry (September 16, 2016)

Core Content Overview

This document provides a comprehensive outlook for the U.S. livestock, dairy, and poultry sectors for 2016 and 2017, analyzing production, prices, and market trends.

Key Sectors and Trends

Red Meat and Poultry

• Per Capita Disappearance: In 2016, U.S. per capita disappearance of red meats and poultry is projected at 214.8 pounds, down from 222 pounds in 2006.
• Poultry Dominance: Poultry accounts for 51% of the total red meat and poultry disappearance, with 91.5 pounds of broiler meat and 17 pounds of turkey per person.
• Beef Disappearance: Beef contributes 49% of total disappearance, with 55.2 pounds per person.
• Retail Beef Prices: Declined to $6.09 per pound in July 2016, down 11 cents from the previous month and 28 cents from July 2015.
• Wholesale Beef Prices: Continued to fall, with the Choice cutout at $189.49/cwt as of September 9, down $48.96/cwt from the previous year.
• Import Trends: U.S. beef imports are declining, with Canada and New Zealand showing increases, while Australia and Brazil saw declines.
• Export Growth: Beef exports rose 8% year-over-year in July, driven by Japan, Mexico, and South Korea. The all-milk price for 2016 is $16.10-$16.30 per cwt, a reduction from the previous forecast.
• 2017 Outlook: Milk production is expected to increase, with 216.1 billion pounds forecast. Exports are anticipated to grow, and all-milk prices remain unchanged at $16.15-$17.15 per cwt.

Pork/Hogs

• Production Increase: Third-quarter pork production is forecast at 6.1 billion pounds, up 1.9% from 2015, and fourth-quarter at 6.6 billion pounds, up 2.6%.
• Pork Prices: Expected to average $49-$50 per cwt in the third quarter and $39-$41 per cwt in the fourth quarter, both down 9-10% from the previous year.
• Export Trends: Pork exports in July reached 403 million pounds, up 1.9% from 2015, largely due to China/Hong Kong. However, exports to Mexico and Japan declined.
• Exchange Rates: A weaker U.S. dollar relative to the euro and other currencies is expected to support export volumes.
• 2016/2017 Forecast: Pork exports are projected to rise, with third-quarter at 1.3 billion pounds (up 7%) and fourth-quarter at 1.4 billion pounds (up 10%).

Poultry

• Broiler Production: Production forecasts for 2016 and 2017 were reduced due to weak export recovery and low whole broiler prices.
• Broiler Prices: Expected to range between $0.71-$0.72 per dozen in Q3 and $0.83-$0.87 per dozen in Q4, down 70% from July 2015.
• Turkey Production: Increased in July, with the highest levels since 2008. Production forecasts for Q3 and Q4 were raised by 50 million and 25 million pounds, respectively.
• Turkey Prices: Forecasted to be $1.19-$1.22 and $1.22-$1.28 per pound, respectively, due to low cold storage stocks.
• Table Egg Production: Sharp increase in July (up 11%) compared to the previous year, attributed to recovery from HPAI. Forecast for 2017 is 7.4 billion dozen, close to 2014 levels.
• Egg Prices: Continued to decline, with third-quarter prices at $0.71-$0.72 per dozen and fourth-quarter at $0.83-$0.87 per dozen.
• Egg Exports/Imports: Exports fell 6% in July, while imports dropped 47%. Declines were mainly due to reduced shipments to Canada, partially offset by increases to Hong Kong, Mexico, and Japan.

Key Information and Forecasts

Feed Prices

• Corn (2016/17): Forecast at $2.90-$3.50 per bushel, up 5 cents from the previous month.
• Soybean Meal (2016/17): Forecast at $300-$340 per short ton, down $5 from the previous month.
• Alfalfa Hay: National average price decreased from $142 per short ton in June to $140 in July, $32 lower than July 2015.

Market Outlook

• Cattle/Beef: Fed steer prices are 21% below the beginning of the year and 25% below 2015. Prices may stabilize in Q4 due to seasonal supply constraints and stronger holiday demand.
• Dairy: Butter and cheese prices are expected to fall, while NDM and dry whey prices rise. The all-milk price for 2016 is $16.10-$16.30 per cwt, and for 2017, it remains $16.15-$17.15 per cwt.
• Pork: Prices are expected to remain low due to increased production and competition from beef and poultry. Exports are projected to rise, especially to Asian markets.
• Poultry: Broiler and turkey production are expected to increase, but prices remain low due to high supply and weak demand. Table egg production is forecast to grow, but prices are expected to stay subdued.

Contacts and Resources

• Mildred M. Haley – Coordinator, (202) 694-5176, m Haley@ers.usda.gov
• Keithly Jones – Coordinator, (202) 694-5172, kjones@ers.usda.gov
• Seanicaa Edwards – Cattle/Beef, (202) 694-5333, seanicaa.edwards@ers.usda.gov
• David J. Harvey – Poultry economist, retiring on September 30, djharvey@ers.usda.gov
• Sean Ramos – Poultry, sean.ramos@ers.usda.gov

Key Figures and Data

• Red Meat and Poultry Disappearance: 214.8 pounds per person in 2016.
• Beef Imports (July 2016): Declined, with Canada up 30%, New Zealand up 11%, and Australia down 35%.
• Pork Exports (July 2016): 403 million pounds, up 1.9% from 2015, with China/Hong Kong accounting for 15% of exports.
• Table Egg Production (July 2016): 613 million dozen, up 11% from the previous year.
• All-Milk Price Forecast (2016): $16.10-$16.30 per cwt, down from $16.25-$16.45 per cwt.
• 2017 All-Milk Price Forecast: $16.15-$17.15 per cwt, unchanged from previous forecast.

Outlook Summary

• Beef: Prices are expected to remain low due to high supply and competition, but may stabilize in Q4.
• Dairy: Butter and cheese prices are projected to decline, while NDM and dry whey prices are expected to rise. U.S. dairy is becoming more competitive globally.
• Pork: Prices are under pressure from increased production, but export growth is anticipated.
• Poultry: Broiler and turkey production are expected to rise, but prices remain low. Table egg production is increasing, though prices are still weak due to over-supply.