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U.S. Meat and Poultry Production Year-to-Date 2012

U.S. Meat and Poultry Production Year-to-Date 2012 Dr. Ross Pruitt, LSU AgCenter
At the onset of 2012, U.S. pork production was the only major protein source that was expected to exhibit a year-on-year increase. U.S. beef and broiler chicken production were both expected to experience decreases for two very different reasons. Tight supplies of feeder cattle and unprofitability of vertically integrated firms in the broiler chicken industry were expected to lead to reductions in production for those species, resulting in increased prices. Production so far this year has fallen in line with expectations. Hog and live cattle futures were both higher than year-ago levels at the beginning of June with live cattle futures 15% higher. Georgia dock prices for broilers are 8% higher, with wings and boneless/skinless breast prices 11% and 12.5% higher, respectively. Year-to-date (YTD) beef production is 2.8% lower than a year ago as federally inspected (FI) cattle slaughter is 4.7% lower so far in 2012. Federally inspected steer and heifer slaughter is down 5% while total cow slaughter (beef and dairy) is down 3.5% through mid-May. Beef cow slaughter is down 8.6% YTD but should see larger declines as the year progresses, weather conditions permitting. Carcass weights, on a weekly basis, have averaged 1.8% higher this year on higher steer and heifer dressed weights, which has prevented a larger decrease in beef production occurring so far in 2012. Increased carcass weights will not be enough to prevent larger decreases in beef production as the second half of 2012 begins. The Livestock Marketing Information Center (LMIC) currently forecasts beef production in the third and fourth quarters at 4.6% and 3.3% lower, respectively, and down 2.9% year-on-year for 2012. YTD U.S. pork production is 2.1% higher than a year ago due to FI hog slaughter that is 1.8% higher than a year ago through the first week of June. Carcass weights on a weekly basis have largely been even with last year. LMIC forecasts third quarter pork production to be even with the previous year and 3.5% higher in the fourth quarter. This will lead to a 2.4% increase in 2012 production over 2011. Broiler chicken egg sets continue to be approximately 4.6% below year-ago levels. Total young chicken slaughter through April is 2.1% lower than 2011, but production on a ready-to-cook basis is 1.5% lower. Average live weights for broilers have been slightly higher than a year ago on a weekly basis. It was mid-June 2011 when egg sets began to show drastic year-on-year decreases, but at the end of May 2012, egg sets were 2.3% lower than 2011 (approximately 5.3% lower than 2010). Net ready-to-cook production in the first quarter of 2012 was 2.2% lower than a year ago, with approximately 2% declines expected by LMIC in the second and third quarter of this year. The fourth quarter of 2012 is forecasted to experience a 3.6% increase and will contribute to an annual decline of only 0.7% for U.S. broiler production. Declines in poultry production have improved the earnings potential for integrated firms, but maintaining that discipline might prove difficult. However, potential pullet placements have been declining through much of this year. Potential pullet placements through November 2012 are between 4% and 5% lower than a year ago, which suggests that integrated firms are not planning to increase production significantly at this time. Forecasted production for the remainder of 2012 should be favorable to prices. Hog prices for 2012 will average out largely equal to last year as estimated returns have been slightly negative so far this year. Fed cattle prices could be 7% higher in 2012 than 2011. Feeder cattle prices in the Southern Plains may be 14% higher for the year, with weaned calf prices 22% higher, according to LMIC forecasts.