According to USDA's latest World Agriculture Supply and Demand report, U.S. beef and pork production will increase in 2008 and in 2009.

Specific to pork, USDA increased its 2008 production forecast to 23.556 billion pounds, a 78-million-pound increase. It also stepped up its 2009 forecast by 275 million pounds, increasing its production estimate from 22.750 billion to 23.025 billion pounds.

USDA's 2008 pork production forecast grew because, as the report indicates, agency analysts say that demand is boosting hog prices and supporting increased slaughter of hogs at slightly heavier weights than was expected last month. The report also raised the 2009 forecast based on expected strong product demand, which will support increased slaughter. It points to weaker grain prices, which the report says will likely moderate previously expected pork production declines next year.

Of course, the report does not go on to talk about the potential loss scenario that pork producers have and will continue to face into 2009 even with the softening corn and soybean prices.

As for this year's pork exports, USDA significantly increased its forecast to 5.406 billion pounds from 4.556 billion pounds a month ago. For 2009, the report upped its projection from  4.135 billion pounds last month to its current estimate at 5.100 billion pounds . USDA's report cited continued strong sales to Asia as the reason for the higher export projections.

The agency report puts prices for barrows and gilts (live equivalent, 51 percent/52 percent lean) averaging $53 to $55 per hundredweight for third-quarter 2008, then dropping to $47 to $49 into the fourth quarter. For 2009, USDA predicts prices averaging $51 to $56.

USDA boosted its 2008 U.S. beef production forecast by 122 million pounds to 26.668 billion pounds from 26.566 billion pounds, and increased its 2009 forecast by 165 million pounds to 26.550 billion pounds, from 26.385 billion pounds.

On the beef side, USDA's report indicated a slower-than-expected pace of feedlot marketing seem earlier this year is expected to result in more fed-beef production in the second half of the year. Also, that higher cow slaughter will support higher near-term beef production.

USDA forecasts 2008 beef exports at 1.725 billion pounds, up from 1.700 billion pounds. It also raised 2009 to 1.915 billion pounds, up from 1.890 billion.

USDA expects choice steer prices (Nebraska, Direct, 1,100 to1,300 pounds) to average $95 to $97 per hundredweight for the third quarter, and $94 to $100 per hundredweight in the fourth quarter. The agency looks for 2009 prices to average $92 to $100 per hundredweight.

Source: USDA