2012 cattle prices expected to increase above 2011 levels

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Total U.S. meat production in 2012 is projected to be about unchanged from 2011 as lower beef production largely offsets higher pork and poultry production. Declines in cattle inventories will diminish the pool of cattle available for placement during 2012 which in turn will reduce the number of fed cattle available for slaughter. Placements will also be constrained in 2012 if producers begin rebuilding herds by retaining heifers from the 2011 calf crop for addition to the breeding herd. Pork production is expected to increase gradually, largely due to increases in the number of pigs per litter; growth in farrowings is expected to be modest. Both broiler and turkey production for 2012 are forecast higher as returns improve following expected production cutbacks during the latter part of 2011. However, as feed prices remain relatively high, the rate of expansion during the year is expected to be modest. Little expansion is expected in 2012 egg production as returns during 2011 will be squeezed. Egg production declines, which are forecast to begin in 2011, will likely carry into the first part of 2012 before production increases.
The total meat production forecast for 2011 is raised from last month as higher beef, pork, and turkey production more than offset a small decline in broiler production.

Higher-than-expected first-quarter placements of cattle on feed and continued relatively heavy cow slaughter support a higher beef forecast for 2011. Pork production is raised on continued heavy carcass weights. Broiler production is lowered from last month. First quarter production was higher than expected but forecast production in the middle of the year is reduced as poor returns are expected to weigh on the sector. The turkey production forecast is raised from last month, with a more moderate decline in production forecasts for late in the year.

Tight supplies of U.S. beef and increasing supplies of competitor beef are expected to constrain U.S. beef exports in 2012. Pork exports in 2012 are expected to increase from 2011 as world economic growth supports demand for U.S. pork. Broiler exports are forecast higher for 2012 as the U.S. continues to diversify its export markets. Beef imports are expected to be higher in 2012 as U.S. cow slaughter declines. The 2011 red meat export forecast is unchanged from last month. Broiler exports are forecast lower than last month on slower-than-expected sales to several markets.

In 2012, cattle prices are forecast to rise above 2011 as cattle supplies continue to tighten. Hog prices are little changed from 2011. Broiler and egg prices are forecast to be above 2011 but turkey prices are forecast lower. For 2011, cattle price forecasts are raised from last month as demand for fed cattle remains relatively strong. Hog and broiler prices are unchanged from last month, but turkey and egg prices are forecast higher.

Source: USDA,WASDE



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