Outlook: The Upside for Livestock

Livestock, Poultry Outlook Projects Higher Prices

Victoria G Myers
By  Victoria G. Myers , Progressive Farmer Senior Editor
The price outlook for livestock was mostly positive during the USDA's annual outlook. The forecast highlights higher cattle and hog prices for 2021. (DTN/Progressive Farmer photo by Pamela Smith)

BIRMINGHAM, Ala. (DTN) -- Higher meat production in 2021, taking total levels to a record 106.5 billion pounds, won't be enough to put the brakes on price increases.

Overall, the average five-area steer price should be about 6% higher for 2021 and hog prices are forecast to increase an average of 17% compared to 2020.

Seanicaa Herron, agricultural economist for the World Agricultural Outlook Board, presented 2021 outlook numbers for livestock and poultry during the USDA Agricultural Outlook Forum. Her forecast pointed to higher prices across beef, pork, broilers and turkey. Egg prices were projected flat year over year. These increases were in spite of higher total production, and a fractionally lower retail per capita disappearance, at 224.8 pounds.

Increasing feed costs will play a key role moving forward, she added, and will likely lead to reduced weights on harvested broilers and cattle. Her feed cost outlook had corn at $4.30/bushel for 2020-21 and $4.20/bushel for 2021-22. Soybean meal was at $400/ton for 2020-21 and $390/ton for 2021-22.

In addition, Herron noted exports are expected to increase, helping to keep prices strong.

Specific projections by species included the following:

CATTLE

The five-area steer price for 2021 is forecast at $115 per cwt, up nearly 6% from 2020. USDA cites firm domestic demand and stronger exports are expected to support higher prices, despite higher beef production.

Cattle inventory will continue to fall in 2021, marking the second year of decline, with 93.6 million head as of January 2021, a 0.2% drop from year-earlier levels. The U.S. beef cow herd was projected down 1%, at 31.2 million head. The 2020 calf crop was estimated at 35.1 million head, 1% smaller than for 2019. Rates of decline are expected to slow, however, as producers are forecast to retain about the same number of replacement heifers in 2021 as they did in 2020.

The number of cattle grazing on small grains is estimated to be 7% higher than a year ago. USDA suggests these cattle will likely enter feedyards in early 2021 and marketing during the latter part of the year. Higher feed costs and low forage stocks in parts of the country could slow down the timing of when those cattle go to feedyards.

Beef production for 2021 is forecast at a record high, up 1.4% over 2020, reaching 27.5 billion pounds. Herron noted this is primarily due to heavier carcass weights on the average. Higher feed costs, she added, will temper growth moving forward by quarter. Beef exports are forecast to increase in 2021, at 3.1 billion pounds.

Overall, a 6% increase in beef prices was projected for 2021.

HOGS/PIGS

Hog prices nationally are expected to average $50.50 per cwt for 2021, up nearly 17% from 2020 levels for 51%-52% lean hogs. While processing will increase, firm demand will support higher prices, USDA stated.

Expectations of a larger pig crop, and increases in growth and number of pigs per litter, is projected to support record pork production at 28.7 billion pounds, up 1.4% from 2020. Pork exports were forecast lower for 2021, at 7.2 billion pounds, a 1.5% drop. This is tied to a move by China toward rebuilding herd and sow inventories which is expected to pull down its import numbers relative to the previous year's. Despite this, strong and improving demand on the domestic side will result in a 17% projected price improvement for pork this year.

BROILERS

This year continues a trend toward lower chick placements, but higher production levels are forecast due to heavier average bird weights when compared to previous years. This supports record broiler production for 2021, at 44.9 billion pounds, up 1% over 2020 levels. Export numbers are forecast higher, increasing to 7.4 billion pounds, about 0.3% more, due to anticipated import demand from China and a gradual recovery in the global economic condition. Prices are projected up 15.4% higher.

TURKEY

Turkey placements are lower than year-earlier levels. More eggs are reported in incubators, but they are still below the three-year average. Turkey production as a whole is forecast at 5.7 billion pounds, down 0.3% from 2020. Exports are expected to be slightly higher at 0.6% more with increased demand from China. Prices on this front are forecast to show a gain of about 4%.

EGGS

Egg production is forecast to climb about 1% in 2021, hitting 9.3 billion dozen. Prices are forecast to be relatively flat through the year, with a slight 0.4% edge to the downside on the New York wholesale egg price market. Egg exports are forecast at 335 million dozen, down 2.6% from 2020.

Victoria Myers can be reached at vicki.myers@dtn.com

Follow her on Twitter @myersPF

Victoria Myers