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Global Recession - Tough Time for Livestock Producers

by 5m Editor
23 April 2010, at 12:00am

Rachel Ralte, reporting for ThePoultrySite, outlines the 2010 overview of the economic outlook for US agriculture, as presented by Joseph W. Glauber, Chief Economist of the US Department of Agriculture, at the 86th annual USDA Agricultural Outlook Forum.

The global recession in the fall of 2008 was followed by a lot of uncertainties in 2009, said Dr Glauber, adding that last year was particularly tough on livestock, dairy and poultry producers.

Meat, poultry and dairy product prices suffered all-time lows. Despite the lowering of feed prices, livestock and dairy producers received negative returns almost throught the entire year.

Producers were forced to reduce herd and flock sizes, which led to slight improvement in prices by the fourth quarter of 2009, he said.

According to Dr Glauber, crop and livestock cash receipts in 2009 were down a combined $39 billion from 2008 levels.

According to USDA's Economic Research Service (ERS) estimates of farm income for 2010, livestock receipts for 2010 are forecast at $130.3 billion, up $11.5 billion from 2009 (and also the third highest on record).


Further contraction in livestock and dairy sectors

Livestock, Poultry, and Dairy Outlook for 2010

"The livestock, poultry, and dairy sectors are being challenged by continued weakness in domestic and global demand for meat and dairy products," said Dr Glauber.

Trade restrictions continue to hinder exports of red meat and poultry.

Dr Glauber says that improved returns are likely to slow the rate of production decline in pork and dairy. On the other hand, an improved forage base has allowed cattle producers to keep cattle on grass longer.

Cattle

January's Cattle report has revealed that cattle inventories dropped by almost one per cent in 2009. According to the report, about two per cent fewer beef replacement heifers were held by producers on 1 January. The beef cow herd was just over one per cent lower and the 2009 calf crop was almost one per cent below 2007.

According to Dr Glauber, beef production is forecast to decline just over one per cent in 2010.

As fewer cattle become available for marketing, steer and heifer slaughter are forecast to decline.

However, Dr Glauber says that the number of cattle outside feedlots will temper the rate of decline.

"Cow slaughter will decline with the reduction in inventory but producer decisions regarding breeding herd adjustments will be an important determinant of the level of cow slaughter," he said.

An increase of more than five per cent in beef imports is expected as US cow slaughter drops and shipments of foreign imports increase.

US beef exports are forecast to increase by roughly 9 per cent compared to 2009, as a result of improvement in demand due to global economic recovery. Per capita disappearance of beef in the US is expected to decline about two per cent, said Dr Glauber.

During 2009, there was lower milk production because of the sharply lower returns.

Between 1 January 2009 and 1 January 2010, cow numbers declined by 252,000 head and milk production dropped by 0.4 per cent. Dr Glauber said that however, the January Cattle report indicated that about two per cent more heifers were being held for dairy cow replacement with one per cent more dairy heifers expected to calve during 2010.

Milk production for the year is expected to decline only by 0.2 per cent. The all milk price for 2010 is forecast to increase to $16.20 to $16.90 per cwt, compared to $12.81 per cwt in 2009.

Pigs

According to Dr Glauber: "The December 2009 Quarterly Hogs and Pigs report indicated that hog producers farrowed about three per cent fewer sows during the last half 2009 and intend to farrow about 2.5 per cent fewer sows through the first half of 2010."

But on the other hand, growth in pigs per litter has been fairly significant. Canadian live hog and pig imports are expected to continue to decline. This is expected to lead to a reduction in hog numbers available for marketing in 2010.

2010 pork production is forecast to go down by about two per cent. Pork imports and exports are forecas to rise by eight and nine per cent respectively – global economic recovery is expected to stimulate meat demand.

Poultry

Estimates reveal that 2010 broiler meat production is forecast to drop just over one per cent while turkey output is expected to fall under two per cent.

In 2008, due to high feed costs, the US poultry industry suffered, and sharply lower returns led producers to cut down on production.

While broiler production is expected to be above year-earlier levels in all 2010 quarters, it is most likely that turkey production will not exceed 2009 levels before mid-2010.

2009 broiler exports went down two per cent as Russian quotas limited access to the country's market.

Dr Glauber said: "Exports may decline 15 per cent as trade disruptions in a number of countries pressure exports." Turkey exports, on the other hand, are expected to rise by two per cent in 2010.

Livestock and poultry prices for 2010 are forecast to shoot up as supplies of red meat drop and demand improves with economic recovery. Dr Glauber says that fed cattle and hogs rise $5-6 and $6-7 per cwt, respectively. Mean broiler prices are expected to go up by one to two cents per pound. Turkey prices are forecast to be two to three cents per pound higher.


Beef, pork and dairy exports recover, poultry exports forecast to fall in 2010

April 2010