USDA Livestock Outlook

Higher Protein Production Forecast Pressures Prices for Livestock Producers

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
Connect with Chris:
Beef production and exports will rise, but the average cattle price will decline slightly in 2018. (DTN file photo by Pamela Smith)

ARLINGTON, Va. (DTN) -- Demand for meat is going to remain firm throughout the rest of 2018, and U.S. livestock producers will continue to see favorable feed prices. But livestock producers are going to be pressured on market prices for beef, hogs and poultry products because of increased production in most livestock sectors.

That's the projection from USDA's outlook for livestock and poultry released early Friday.

The beef, pork and broiler industries are all positioned for higher production and expansion. Exports also will rise for beef, pork and poultry products as well, USDA predicts.

BEEF

Beef production will increase in 2018 as the total cattle inventory, cow herd and calf crop in 2017 all increased, even though a 4% decline year-over-year in heifer placements indicates a slower rate of expansion. The number of cattle-on-feed in feedlots as of Jan. 1 was 14 million head, up 7.2% from a year ago, but the number of cattle outside of feedlots was down 2.3% from a year earlier.

Beef production in 2018 is forecast at 27.7 billion pounds, a 5.9% increase from 2017. Steer and heifer slaughter in 2018 is projected to be higher than 2017, as is the cow slaughter. Total commercial slaughter is projected to rise 4-5%, and carcass weights will increase as well as feedlot operators take advantage of relatively favorable feed costs for 2018.

Beef exports will top 3 billion pounds in 2018, up 5.7% from 2017. Asian markets are going strong with Japan, South Korea and Hong Kong as the leading markets, accounting for 57% of exports in 2017 and projected to continue to carry demand in 2018 as well.

The U.S. also will import 3 billion pounds of beef, up 1.2% from 2017. Higher shipments are expected from Australia and Mexico.

The five-area Nebraska steer price for 2018 is projected at $116 to $123 per hundredweight (cwt), down 2% on average from 2017. Prices bumped up in January, but will ease down into the spring as more cattle hit slaughter-ready weights.

PORK

Conditions remain favorable for growth in pork production as new slaughter plants are expected to come online to increase capacity throughout the year. Producers also are increasing the farrowing of sows, and increases in pig litter sizes will support larger swine production.

Pork production in 2018 is projected to reach 26.9 billion pounds, topping last year's record. USDA sees increased slaughter inventories and heavier carcass weights boosting overall commercial pork production 5.1% higher than 2017.

Pork exports will reach 5.9 billion pounds, almost 5% higher than 2017 as well. Lower pork prices and firm global demand for meat proteins are expected to drive U.S. pork exports. Japan and Mexico, which accounted for 50% of U.S. pork exports last year, are expected to again see strong demand. South Korean exports also rose 29% in 2017 and are expected to remain strong as well.

Pork imports are projected at 1 billion pounds, down 10.2% from 2017.

U.S. hog prices are forecast at $47-$49 per cwt, down from the 2017 average of $50.48. Although demand will remain strong, higher production will put pressure to lower prices this year.

POULTRY

The broiler industry also is responding to good margins in the second half of 2017 and early 2018. Heavier bird weights and increased inventories are the primary factors behind more growth in the broiler sector.

Broiler production will increase 2.3% to 42.6 billion pounds in 2018. U.S. broiler exports are expected to increase 2.5% to nearly 7 billion pounds. Gains are expected from the reopening of the South Korean market in late 2017. Higher shipments to Sub-Saharan Africa, the Caribbean and Central America also will boost broiler exports.

Turkey production will decline slightly to 6 billion pounds. Producer margins declined in 2016 and continued in 2017, leading to lower production. Exports, though, will help boost the turkey sector. After rising 9% in 2017, exports will increase nearly 3.9% in 2018 to 645 million pounds. Mexico remains the largest market for U.S. turkey.

Egg production is projected at 8.9 billion dozen, up 2.1% from 2017. Egg exports will decline slightly to 320 million dozen.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(SK/AG)

Chris Clayton