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Outlook for Livestock - Egg Prices Down From Record Levels

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 - Egg Prices Down From Record Levels - 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.

Egg Prices Down From Record Levels

After egg prices reached record levels during the latter part of 2003 and early 2004, producers increased egg production. Table egg production, which had been flat in 2003, increased 2.4 percent in 2004. Production of egg-type hatching eggs and the flock of egg-type layers, which had been below year-earlier since mid-2003, began increasing in mid-2004.

In the face of larger supplies, wholesale prices averaged in the mid-60 cent range in the second half of 2004 and prices are likely to soften further in 2005 after seasonal first quarter increases. With weaker prices, table egg production growth this year is expected to moderate. Table egg production in 2005 is forecast to be 6.5 billion dozen, almost 2 percent above 2004. Hatching egg production likely will increase about 2 percent.

Given tight first quarter supplies and strong demand for protein, egg prices climbed sharply in early 2004. Prices declined as supplies increased later in the year. Wholesale eggs averaged 82.2 cents per dozen, almost 6 cents below 2003's record but still tied with 1990 as the second highest prices ever. In 2005, wholesale egg prices are forecast to decline to 64 to 68 cents per dozen.

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

5m Editor