KANSAS CITY, Mo. — The composite beef cutout value compiled by the US Dept. of Agriculture as of March 9 was up 10 percent since the first of the year and was up 2 percent from the same date a year ago, while the pork cutout value declined 6 percent since Jan. 1 and was down 11 percent from a year ago. There is no shortage of meat (red meat or poultry), so demand is driving the market with beef the apparent winner.

US beef (and veal) exports were record high at 2,862 million lbs. in 2017, up 12 percent from 2016 and the second consecutive year of double-digit growth, according to USDA data. Shipments to Japan, the largest buyer of US beef, were up 26 percent from 2016 and comprised 29 percent of total US beef exports. After Japan, the top foreign buyers included South Korea (16 percent), Mexico (15 percent), Hong Kong (12 percent) and Canada (11 percent).

The USDA on March 8 forecast 2018 US beef exports at a record 3,025 million lbs., unchanged from its February forecast, which was up 40 million lbs. from January and up 163 million lbs., or 6 percent, from 2017, “based on continuing strong demand in overseas markets and the weakening of the US dollar,” along with “continued tightness of beef availability from Oceania.”

At the same time, US beef supplies continue to increase but at a slower pace. The USDA in its semi-annual Cattle Inventory report showed total Jan. 1 cattle numbers at 94.4 million head, up 0.7 percent from a year earlier and compared with increases of 1.9 percent on Jan. 1, 2017, 3.1 percent in 2016 and 0.7 percent in 2015, which was up from a 2014 inventory that was the lowest since 1951. The report also showed 237,000 fewer beef heifers were retained than a year earlier, which indicated the four-year herd expansion was slowing.

Also affecting beef supplies this year is the drought across the southern Plains, which has reduced pasture and wheat grazing and resulted in the movement of more cattle at lighter weights into feedlots in late 2017 than average. Since those cattle will be on feed longer, first-quarter marketings are expected to decline, but second-quarter sales likely will increase, somewhat shifting the normal flow of beef to the market. Beef production for all of 2018 is forecast to be up 6 percent from 2017.

For pork, the demand picture remains strong, but rising production appears to be keeping a lid on prices. In March the USDA boosted forecast production in 2018 by 25 million lbs. from February, with outturn for the year expected to increase 5 percent from 2017. The USDA based the March increase on heavier slaughter weights, which more than offset fewer hogs marketed. The USDA attributed the increase to still moderate feed costs (though rising), favorable winter weather in major producing areas and positive producer returns. The USDA said in February that higher hog prices may have been more the result of expanded packer slaughter capacity as it wasn’t clear if consumer demand for pork was keeping pace with production increases.

Like beef, pork exports also have been strong. Exports in 2017 equated to 22 percent of US pork production (compared to 11 percent for beef) and are expected to increase 6 percent in 2018 (maintaining a 22 percent share of production). Expected lower pork prices in 2018 are seen as an incentive for increased exports. Mexico is by far the largest buyer of US pork, taking 32 percent of total US pork exports in 2017, followed by Japan at 22 percent and Canada, South Korea and China/Hong Kong at just over 9 percent each.

Other factors also will impact meat and poultry production, exports and supply in the coming months, including feed prices (corn values continue to rise on strong export demand and weather woes in Argentina), weather and trade issues, the latter of which remain unpredictable.