Whole broiler prices at the wholesale level are “not expected to strengthen much,” during the second half of this year even though broiler production is estimated to decrease 1.3 percent in third quarter 2011 and decrease 2.7 percent in fourth quarter this year (a 2-percent decline during second half 2011),  according to the “Livestock, Dairy, and Poultry Outlook” report issued this week from USDA’s Economic Research Service (ERS). However, next year as the lower broiler production begins to help draw down frozen stock levels, ERS expects broiler prices to experience some upward price pressure.  How much pressure will depend, in part, on a gradual strengthening of economic conditions, the analysts explained.  During the first half of 2011 broilers slaughtered increased 2 percent to 4.3 billion birds while the average weight was 5.79 pounds liveweight, up 2.4 percent from first-half 2010. ERS predicts average weights will continue to run ahead of a year earlier during the second half of 2011.

ERS reported that as feed lot inventories decline and beef cow slaughter diminishes, beef production will likely begin to decline during the last half of 2011.  The impacts of smaller calf crops this year and likely next year imply a smaller pool of feeder cattle for placement in feedlots and subsequently tighter supplies of fed cattle.  Cattle prices at all levels reached record highs during the first half of 2011.  Despite these record prices and their expected high levels through 2012, the effect of the drought, high feed and energy prices, macroeconomic uncertainty, and increased equity requirements for cattle loans have dampened enthusiasm for cow-herd expansion, the report said.

ERS said the direction beef prices will take over the next few months is uncertain because of heavy marketings of fed cattle.  Nonetheless, retail beef prices are likely to increase over the next several years as beef cow inventories are rebuilt and more heifers are kept for herd building and diverted from placement in feedlots.  How high retail prices will go will depend on the economic recovery; retail prices of pork and poultry; how rapidly exports increase; and how rapidly beef cow inventories are replenished, ERS stated.

Analysts anticipate second-half commercial pork production to be slightly higher than a year ago.  However, strong export demand is tightening domestic pork supplies and contributing to record prices for live hog and for prices of wholesale and retail pork.  It is likely that 22 percent of pork production will be exported this year–an impressive statistic considering that in 2000, 6.8 percent of U.S. commercial pork production was exported.  The flip side of strong exports this year is lower available pork per capita.  This year, retail weight per capita pork disappearance is expected to be 45.9 pounds down from 47.7 pounds last year and from 51.3 pounds in 2000, ERS said.

 

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