USDA’s broiler production estimate for first-quarter 2012 was increased by 150 million pounds to 8.85 billion pounds but, nonetheless, still represents a decrease of 5 percent from a year earlier, according to the “Livestock Dairy, and Poultry Outlook” report issued yesterday by the the Economic Research Service (ERS). Analysts bumped-up their January-March 2012 production estimates as a result of stronger than expected broiler meat production in January and their assumption that the higher slaughter trend will carry into February and March.

Some of the 5-percent production decrease is expected to come from a smaller number of birds slaughtered.  However, part of that decrease is expected to be offset by small gains in average weights at slaughter throughout the remainder of the first quarter and into the second quarter.  Based on the expectation of slightly higher weights, broiler production is estimated for the second quarter to also increase above ERS’ previous forecast.  Production is now expected to total 9.05 billion pounds, 5 percent below second quarter 2011.

In 2011, ERS reported that U.S. broiler products exports totaled 6.99 billion pounds, 3.3 percent higher than the previous year. Most of the growth was because of record shipments in third-quarter 2011, totaling fractionally less than 2 billion pounds.  Although shipments to Canada during 2011 rose by 12 percent, much of the growth in shipments was to Asian countries. Exports to the Philippines, China, Korea, Hong Kong, and Japan all increased more than 20 percent from the previous year, totaling almost 1.2 billion pounds or around 17 percent of all broiler exports.   Exports to Mexico rose by only 4.2 percent but the gain was enough to increase shipments to that country to over 1 billion pounds, the report noted.

Beef cow slaughter may be declining, ERS said, and at the same time, heifer retention to replace cows may be in the early stages. Cattle feeding margins are improving for the short term, but packers are likely still  experiencing operating losses.  Retail beef prices may also be encountering some consumer resistance.

Consumer demand for pork remained solid in the first two months of 2012. Despite higher pork supplies, prices for hogs were year-over-year higher. Consumers paid year-over-year higher retail prices for larger supplies of pork in January 2012. Pork exports in January 2012 were 36 percent higher than a year ago, with Japan, Mexico, and China being the three largest destination markets. First-quarter prices for 51-to-52-percent live equivalent hogs are expected to be $63-$64 per hundredweight, almost 6 percent above the same period last year.

In a related news, yesterday’s “Daily Livestock Report” noted that the cutout value for broilers for the week of March 11 “jumped sharply” by $4.43 per hundredweight to reach $95.97 per hundredweight.  This level is the highest since 2004 when the cutout value top $109 per hundredweight.  Analysts explain the cutout value for broilers is the weighted average price for all parts.  Important “contributors” to the higher cutout value were boneless/skinless breast, breast tenders, and wings.

 

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