Swine, dairy and poultry numbers are trending down and the U.S. beef herd is likely to continue contracting in the next couple of years. This month’s Livestock, Dairy and Poultry Outlook report from the USDA’s Economic Research Service notes that declining dairy cow inventories, no growth in dairy replacement heifer inventories, and beef heifer inventories that are declining more rapidly than beef cow inventories imply continuing liquidation of the national cow herd.

Summer prices for live hogs and pork cuts continue to languish at year-over-year lower levels due to lackluster demand for pork products. Second-quarter pork exports were 31 percent lower than a year ago, largely due to lower demand for pork in Asia, more specifically China. Last year was a record-setting year for U.S. pork exports, and this year was expected to be lower, but global economic issues and the Type A H1N1 influenza concerns are enhancing sluggish export sales. Many in the industry are calling for a 10 percent to 12 percent reduction in production before the industry can return to profitable levels. Signs are showing a recent increase in sow slaughter.

On the beef side, heifers going to feedlots instead of into breeding herds increase short-term beef supplies, but the combination of fewer replacement heifers, increased short-term heifer beef, and declining overall placements of cattle in feedlots will likely result in reduced beef supplies into 2012 or beyond. The current liquidation phase began in 2005, peaked and in 2007 according to the report.

July 1 dairy cow inventories declined by 1.6 percent from the same date last year, a reversal of the recent expansion trend and the first decline since July 1, 2004. Milk replacement heifer inventories were unchanged from July 1, 2008, suggesting herd reductions are leveling off. However, the report notes that continued poor returns will likely dampen most expansion plans.

Poultry production declined significantly during the first and second quarters of 2009, but broiler production should approach last-year’s levels in the second half of this year. With only a small decline in production and lower exports, USDA increased third and fourth quarter forecasts for broiler ending stocks. Closing the year, turkey meat production is expected to continue much lower than in 2008. 

The full report is available from USDA.