ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

Outlook for Livestock - Broiler Production To Expand

by 5m Editor
8 March 2005, at 12:00am

US - This article is an extract of a speech made by Shayle D. Shagam at the USDA Agricultural Outlook Forum 2005. For the livestock sector, the year 2004 can possibly be summed up in the opening lines of Charles Dickens's A Tale of Two Cities: "It was the best of times, it was the worst of times... ...it was the spring of hope, it was the winter of despair..."

Outlook for Livestock - Broiler Production To Expand - US - This article is an extract of a speech made by Shayle D. Shagam at the USDA Agricultural Outlook Forum 2005. For the livestock sector, the year 2004 can possibly be summed up in the opening lines of Charles Dickens's A Tale of Two Cities: "It was the best of times, it was the worst of times... ...it was the spring of hope, it was the winter of despair..." Agriculture Outlook Forum

The United States lost many of its major export markets for beef due to the discovery of a case Bovine Spongiform Encephalopathy (BSE) in December 2003 and faced trade restrictions in poultry due to discoveries of Avian Influenza in early 2004.

Analysts held their collective breath, waiting for large pork production increases as producers expanded in response to good returns. Yet, despite record domestic supplies of meat, average cattle prices in 2004 eclipsed 2003's record, broiler prices reached a new record, and hog prices were the highest since 1997.

The year 2005 opens with great promise. Strong demand for meat protein and moderate growth in meat production have continued to support prices, grain costs have moderated, and the multiyear drought in the western United States has diminished. Producers have responded to increased returns in a measured fashion. Production increases in pork and poultry are expected to be quite moderate in response to the good returns currently enjoyed by these sectors. Positive returns for cow-calf producers and a lessening of drought in the western United States have led to a turnaround in the cattle cycle which had experienced 8 years of liquidation.

There are, however, points of caution in the upcoming year. Although progress has been made in addressing the concerns of our trading partners, major U.S. beef export markets remain closed and supplies of red meat and poultry for domestic consumption are expected to increase 2-3 percent. Domestic demand remains firm but increased supplies of meat are expected to pressure prices down from last year=s highs. As the United States continues to expand export sales, markets will likely find additional support. Continued economic growth and favorable exchange rates may be key factors for the U.S. meat sector in 2005.

Broiler Production To Expand

Broiler producers are set to expand broiler meat production just over 3 percent in 2005. After two years of favorable returns and last year's record prices, growth of this magnitude shows considerable restraint on the part of producers. Weekly eggs set during 2004 were an average 2.3 percent higher and in the first 6 weeks of 2005 have increased about 2.5 percent. Broiler prices are expected to decline from 2004's record.

Moderating grain prices and continued strong demand for meat protein are expected to help support placement levels above last year and likely encourage continued gains in bird weights. However, compared with historical industry response to favorable returns, growth in broiler meat production is likely to be quite moderate.

Broiler prices, as measured by the 12-City Wholesale price, are forecast at 71 to 76 cents per pound, compared with an average of just over 74 cents in 2004. Increased supplies of meat, particularly beef, are expected to pressure broiler prices. Retail broiler prices are expected to decline in the second half of the year but average about the same as 2004. However, continuing recovery in exports likely will help limit declines in broiler prices.

Broiler meat exports are forecast to increase 5 percent to about 5.03 billion pounds in 2005 but will remain below 2001's record of 5.5 billion pounds. Russia's TRQ will continue to limit imports from the United States to 1.7 billion pounds (771,900 tons). However, as a result of delays in issuing quotas early in the year, the United States shipped less than quota levels to Russia in 2004. Thus, there is potential for exports to Russia to increase modestly in 2004.

Exports of broilers to China/Hong Kong were depressed in 2004 as a result of border restrictions due to the discovery of Avian Influenza in the United States. Although trade resumed in November, exports have not returned to their pre-ban levels. Brazil dramatically increased exports to China during 2004 and can be expected to be a strong competitor in 2005.

There likely will be opportunities for growth in a number of other small markets but these markets tend to be price sensitive. High broiler parts prices in mid 2004 limited trade with some of these countries but lower prices may encourage larger sales in 2005.

To view the full PDF speach (ideal for printing) Click Here

Source: USDA Agricultural Outlook Forum 2005 - 25th February 2005

5m Editor