In its World Agriculture Supply and Demand Estimates report for 2008 and 2009, USDA has dropped its forecasts for total U.S. meat production. Reduced pork and broiler production are the drivers.
While will at record levels, USDA reduced this year's pork production to 23.471 billion pounds from 23.55 billion pounds on a lighter hog slaughter than anticipated for this last quarter of the year. The report lowered 2009 pork production forecasts to 23.094 from 23.164 projected in October. Fewer hogs coming in from Canada was the reason cited.
The stronger U.S. dollar and softening demand from foreign buyers also are expected to weigh on U.S. pork exports. USDA cut its 2008 pork export forecast to 5.068 billion pounds from 5.318 the level projected last month and dropped its 2009 forecast to 4.5 billion pounds from 5.1 billion pounds expected previously.
The price estimate for average barrows and gilts (live equivalent, 51/52 percent lean) for this year to $47.86 per hundredweight from $49.11 last month. In 2009, USDA pegs prices to average in a range from $48 to $52 per hundredweight, compared to $50 to $55 estimated in October. Again, the agency cited weaker exports as the reason.
The 2008 broiler production forecast was sliced to 36.745 billion pounds from 36.767 last month. While third-quarter production was offset by expected declines in the fourth quarter. Hatchery data point to declining egg sets, also market weights have started to decline.
USDA increased its 2008 broiler export estimate to 6.719 billion pounds, up from 6.674 billion pounds as third-quarter shipments exceeded expectations and offset weaker fourth-quarter sales.
Specific to 2008 turkey production, USDA increased levels to 6.185 billion pounds from 6.174 billion pounds due to growth in fourth-quarter production. Turkey exports for this year increased, but declines are expected for 2009 because of the dollar's strength and weaker demand.
Broiler price forecasts remained unchanged from the previous report, while 2008 and 2009 turkey price forecasts declined slightly due to higher domestic supplies.
This year's beef production was reduced slightly to 26.801 billion pounds from 26.805 billion pounds in October's report. That's based on the third-quarter production estimate.
Softer export demand and the U.S. dollar are again expected to dampen exports. USDA now expects 1.841 billion pounds of beef to be exported in 2008 versus 1.876 billion pounds forecasted. In 2009, beef exports are now pegged at 1.92 billion pounds, down from 2.06 billion pounds previously expected. USDA also cut its U.S. beef import estimates for this year and next.
Choice steer prices (Nebraska, Direct, 1100-1300 pounds) for this year slipped to $93.22 per hundredweight from $93.97 projected in October. For 2009, USDA reduced its average price forecast to $93 to $100 from $94 to $102 in October.
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