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US beef production to decline further

By Melodie Michel , 28-Feb-2012

American beef production is expected to go down by 4% in 2012, hindered by record low cattle numbers, the US Department of Agriculture (USDA) has revealed.

Speaking at the Agricultural Outlook Forum 2012 in Washington, DC, USDA livestock analyst Shayle D Shagam said beef production was unlikely to increase again before late 2014 or 2015. “With a smaller cow herd at the beginning of the year and only a small increase in number of heifers expected to calve during 2012, a further decline in the calf crop can be expected. This will lead to tighter cattle supplies moving into 2013,” he said.

USDA chief economist Dr Joseph Glauber added: “Livestock and dairy producers have faced tight margins for most of the past five years. Despite higher product prices, little expansion has occurred. The 1 January cattle inventory was at its lowest level since 1952.”

Beef exports are expected to decrease slightly in 2012, down to 2.77bn lbs after a record 2.79bn lbs in 2011. Although demand will remain strong, tighter supplies will increase competition between foreign and US consumers, and the slowing decline of the dollar will mean that any rise in US beef prices will be reflected in export prices.

The outlook is slightly more positive for the pork sector, with an expected rise of 2% to 23.2bn lbs. “With pigs per litter expected to grow at just under last year’s rate, the pig crop for the first half of the year will be about 58m head, slightly less than 2% above last year. This first-half pig crop, coupled with the 58m head reported for the second half of 2011, will support increased slaughter during 2012," said Shagam.

However, pork producers will still suffer from high feed prices, limiting returns.

Exports are also expected to drop after a record year in 2011, but USDA expects a relatively strong performance. “[South] Korea’s production is expected to rebound, limiting its need to rely on imported pork and exports to Russia are expected to face competition from increased domestic production and, with a lowered tariff-rate quota, competition with other exporters will increase,” Shagam added.

USDA forecast a 3% decline in broiler meat production in 2012, as oversupply in 2011 depressed prices and discouraged producers to expand their flocks. However, exports are expected to reach a record 7.05m lbs, bolstered by economic growth in importing countries and a relatively weak US dollar.

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