Livestock and Poultry Outlook

Expect Growth in Beef, Hog and Poultry Production

Emily Unglesbee , DTN Staff Reporter
The U.S. beef herd is entering its fourth year of expansion in 2017. (DTN photo by Pamela Smith)

ARLINGTON, Va. (DTN) -- Is there such a thing as too much meat? Maybe, according to the USDA World Agricultural Board.

In an initial 2017 outlook comments for the beef, pork, and poultry industry, USDA cited 2016 as a record year for meat production in the U.S., which could weigh down markets as production continues to climb in 2017 and the U.S. beef herd enters its fourth year of expansion.

No single sector of the meat production industry set records, but together, beef, pork, broilers and turkey all increased production 3.1% from 2015 to a record 97.6 billion pounds in 2016. And 2017 may set more records, namely for red meat and poultry production, which are expected to increase more than 3% and surpass 100 billion pounds for the first time ever.

These soaring production levels will have the expected depressing effect on prices, USDA added. The board predicted lower prices for cattle, hogs and turkeys in 2017. Broiler prices are expected to make only "fractional" gains in the coming year.

As a result of lower prices, exports are expected to improve slightly, but the strong U.S. dollar and continued modest economic global growth will likely hamper any significant export gains.

CATTLE AND BEEF

With feed prices projected to stay stable in 2017, the U.S. cattle herd is expected to head into its fourth year of expansion. USDA's January 2017 cattle report pegged the cow-calf herd at 93.6 million head, 2% higher that month compared to 2016. The beef cow herd also grew 3% to 31.2 million head. According to producer reports, 1% more heifers are expected to be retained in U.S. herds this year, and 1% more heifers are expected to calve.

Commercial beef production is set to increase by 3% to 26 billion pounds in 2017, the highest level of production since 2011. Total commercial cattle slaughter is expected to increase by just below 3%, and carcass weights are estimated to increase to just over 828 pounds.

Beef exports in 2017 are forecast at 2.72 billion pounds, a nearly 7% hike from 2016. That's slower than the growth trend from 2016, when exports grew by 13%, bolstered by falling prices and a declining Australian herd.

Australia is working on expanding their herd in 2017, but "biological constraints" will likely keep any herd growth in check and limit exports that could compete with the U.S. However, a strong U.S. dollar is likely to continue checking U.S. export growth.

Beef imports in 2016 declined 11%, due to increased domestic production. That trend is expected to continue into 2017, with imports for the year forecast at 2.74 billion pounds, a 9% drop from 2016, thanks to increased U.S. cow slaughter and lower prices for domestic lean processing-grade beef.

The 5-area steer price for Texas/Oklahoma/New Mexico; Kansas; Nebraska; Colorado; Iowa/Minnesota feedlots in 2017 is forecast to average $109 to $116 per cwt, down from 2016's average of $121. Feeder steer prices are pegged at an average of $132 to $139 per cwt, down from $143 in 2016.

HOGS AND PORK

Good margins in 2015 and early 2016 encouraged producers to increase their breeding herd and farrow more sows last year. Along with a record growth in sow productivity, a record number of hogs are expected to be slaughtered in 2017. This number depends on new hog slaughter facilities coming online in time, however.

In its December 2016 Quarterly Hogs and Pigs report, USDA pegged the number of all hogs and pigs at 71.5 million head, up 4% from December 2015. That marks the highest inventory since 1943 for the U.S. The breeding herd was estimated at 6.1 million head, up 1% from 2015.

In the same December report, producers indicated they farrowed 2% more sows in the second half of 2016 and intend to farrow about 1% more sows in the first half of 2017. Higher farrowings will be supplemented by the growth in pigs per litter nearing pre-PEDv levels. These factors are expected to contribute to a record number of hogs slaughtered in 2017.

Commercial pork production is forecast at a record 26.17 pounds, up 5% from 2016. Carcass weights are expected to grow slightly as well, to 212 pounds.

Pork exports for 2017 are pegged at 5.44 billion pounds, up 4% from 2016. In 2016, exports increased 4% as well, thanks to lower prices.

Pork imports are estimated at 1.09 billion pounds this year, just barely below 2016 levels. Imports from our predominant source of imports -- Canada -- decreased 8% in 2016. Higher U.S. pork production and lower prices will likely make the U.S. a less attractive market in 2017, as well.

Hog prices are forecast to average $42 to $45 per cwt in 2017 (51% to 52% lean, live equivalent), down from $46 in 2016.

POULTRY AND EGGS

Broiler meat production is pegged at 41.53 billion pounds in 2017, up 2% from 2016. As of the beginning of January 2017, the layer flock was 1% down from 2016, a result of weak margins and a cautious approach to flock expansion from producers.

Slower weight growth is expected to temper broiler meat production as well, which may reflect an industry response to "woody breast" concerns -- a condition where breast muscle myopathy affects the quality of breast meat in heavier birds.

A second year of growth is forecast for broiler meat exports, which are pegged at 6.93 billion pounds in 2017, up 4% from 2016. Broiler prices are forecast at $0.82 to $0.87 per pound this year, compared to a 2016 year-long average of $0.84.

Turkey production in 2017 is pegged at 6.12 billion pounds, a 2% increase from 2016. Turkey exports are expected to increase to 630 million pounds, a 11% jump from last year.

Total U.S. egg production is expected to hit 8.55 billion dozen, up nearly 2% from 2016. Table egg production is pegged at 7.42 billion dozen, an increase of nearly 2% from last year.

Egg and egg product exports fell 11% in 2016 to 279 million dozen. They are expected to rebound 17% to 325 million dozen in 2017, thanks to lower prices and increased access to South Korea this year.

Emily Unglesbee can be reached at emily.unglesbee@dtn.com.

Follow Emily Unglesbee on Twitter @Emily_Unglesbee.

(CC\SK)