Broiler production expansion during the second half of 2011 and into 2012 will depend greatly on the strength of the general economy, including a gradual decline in the unemployment rate, and the prices for corn and soybean meal, according to the “Livestock, Dairy and Poultry Outlook” report this week from USDA’s Economic Research Service (ERS). Feed prices are expected “to continue at very high levels,” ERS analysts added.  At the same time, ERS expects average broiler weights to continue rising in the months ahead, although the rate of growth will likely be “considerably lower” next year than in 2011.  ERS indicated broiler production estimates were trimmed “slightly” because of the recent damage to broiler operations caused by tornadoes in late April, especially in Alabama.

Wholesale broiler prices are likely to move higher during the second half of this year.  With increased broiler production in 2012, ERS expects stronger broiler prices during the first half of 2012 before moderating during the second half of next year.  On balance, the average annual wholesale broiler price in 2012 will be “only slightly higher” than in 2011, the report said.

“Other chicken” (spent fowl) production is forecasted to be 515 million pounds in 2012, up about 4 percent from this year.  Production is expected to increase during much of 2012 before declining toward the end of the year.  “Other chicken” exports are expected to total 90 million pounds in 2012, only slightly higher than in 2011.  “Other chicken” production in 2012 will be dependent on decisions by broiler companies and table egg producers to expand or contract production.  With small increases expected in both production and exports, per capita “other chicken” consumption is estimated at 1.4 pounds in 2012, up from 2011, but about the same as 2010.

Looking at the beef situation, ERS explained that as a result of weather-related events (floods, cold and wet spring, and drought) affecting beef cow herds and, after a brief pause, total weekly federally inspected total cow slaughter has increased again at rates generally 1 to 2 percent above rates for the corresponding weeks last year, for at least five weeks through April 23.  Slaughter for the week ending April 30 was down by almost 3 percent.  These slaughter rates likely reflect a reversal regarding any plans for cow herd expansion in the southern tier of states most affected by the drought.  Other parts of the country, notably the Northern Plains and Rocky Mountain regions, are beginning to exhibit signs of heifer retention for cow herd expansion.  Weekly federally inspected dairy cow slaughter, on the other hand, has continued its relatively high ongoing rate in the 2-to-5-percent range, ERS reported.

ERS said that hog producers are coping well with high feed costs.  Analysts stated that lower April hog slaughter numbers were largely offset by higher-than-expected average dressed weights, despite sharply higher feed costs.  This situation suggests that the market is rewarding producers for marketing heavier hogs.  USDA’s forecasts for corn, soybean meal, and live hogs taken together indicate positive hog feeding margins for all quarters of 2011.  The positive feeding margins for hogs are the result of hog prices that have increased faster than feed costs.  This is a somewhat surprising, ERS said, given that the average 2011 farm price of corn is expected to increase almost 52 percent over its average price in 2010.  However, hog prices have increased sharply since 2009 and are expected to achieve a record high in 2011 increasing more than 15 percent this year compared with 2010, after having increased almost 34 percent in 2010, ERS concluded.

 

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