USDA's December World Agricultural Supply and Demand Estimates (WASDE) report, released on Friday, Dec. 9, was rather uneventful for both the cattle and hog markets as imports and exports were little changed, and both steer and barrow prices remained steady with last month's projections.
The report shared that 2022 beef production increased by 70 million pounds as strong throughput and heavier carcass weights have contributed more to the market than originally anticipated. Production for 2023 held steady at 26,275 metric tons, with the first quarter being the most aggressive, producing 6,660 metric tons, followed by the second quarter with 6,600 metric tons, and the third quarter was pegged at 6,490 metric tons.
Beef prices were repetitious on the report, as not one single price differed from the November report.
Beef prices for the fourth quarter remained steady at $152.00. For 2023, the first quarter remained at $153.00, the second quarter remained at $154.00 and the third quarter remained at $155.00. This immediately raised the question of whether or not the market will break the long-term resistance at $160. The cash market is currently feeling the pressure, and if the analysis of the December WASDE holds true, the 2023 spring high could top around $155, which is where the market traded in the Southern Plains during the week prior to the report being released.
Beef imports for 2022 held steady at 3,376 million pounds, and beef exports for 2022 increased by 20 million pounds to finish the year out at 3,562 million pounds. For 2023, beef imports held steady at 3,350 million pounds, and beef exports again grew by 20 million pounds as exports into Asia countries are expected to continue to be a strong market.
Pork production was decreased for 2022 as production has waned slightly in the last trek of 2022 and as carcass weights are also lighter. Pork production for 2022 was decreased by 60 million pounds, now at 27,061 million pounds for the year. Meanwhile, pork production for 2023 remained steady at 27,345 million pounds. The first quarter of 2023 is expected to be the most aggressive processing right at 6,980 million pounds, the second quarter is expected to produce 6,505 million pounds and the third quarter is anticipated to produce 6,615 million pounds.
Similar to the beef sector of the December WASDE, barrow and gilt prices were repetitive as well, as nothing changed from November's report for 2022 or 2023. For the fourth quarter of 2022, barrow and gilt prices are expected to average $71.33. For the first quarter of 2023, prices are expected to average $63.00, for the second quarter they're at $71.00 and for the third quarter they're at $69.00.
Pork imports for 2022 fell by 25 million pounds to now total 1,399 million pounds. Pork exports for 2022 decreased by 75 million pounds to now total 6,334 million pounds. Pork imports for 2023 fell by 10 million pounds to total 1,400 million pounds, and exports for 2023 remained steady at 6,280 million pounds.
The biggest question I have after analyzing Friday's WASDE report is whether or not the projections for the cash cattle sector will remain true. The long-term resistance at $160 is an immense barrier to break through, and the market has been unable to power above it.
Beef production for the spring of 2023 is projected to be 831 million pounds lighter than that of spring 2022. Slower processing speeds will allow packers to somewhat manage their position in the cash market, but with fed cattle supplies growing thinner and thinner, packers may have to chase after the cash complex more than projected. January's Cattle Inventory report will be highly anticipated, and with current beef cow slaughter speeds, the U.S. cowherd is expected to be roughly 1 million head lighter in January 2023 than it was in January 2022. If that is indeed the case, feedlots will continue to control the cash sector as limited supplies favor their position at this point in the cycle.
ShayLe Stewart can be reached at email@example.com
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