KANSAS CITY, Mo. — Strong domestic and export demand for beef and pork amid general economic strength has mitigated price weakness, despite trade tariffs and record red meat production.
Although the US Dept. of Agriculture, in its Nov. 15 Livestock, Dairy and Poultry Outlook, slightly trimmed from October its forecasts for 2018 and 2019 beef and pork production, forecasts for pork and total red meat production still were record high for this year with beef, pork and total red meat also record high for next year. Beef production in 2018 is expected to be up 2.8 percent from 2017 and the second highest on record after 27.1 billion lbs. in 2002 and in 2019 is forecast up 3.3 percent from this year.
The USDA lowered from October its beef production forecast for 2018 by 30 million lbs. to 26.9 billion lbs. and lowered its 2019 forecast by 100 million lbs. to 27.8 billion lbs. The reduction was the result of expected lighter fed cattle slaughter based on lighter placements of cattle into feedlots in the third quarter of 2018, which will be marketed for slaughter early in 2019. Still, total cattle on feed were record high as of Oct. 1, which will keep beef production at a high level early in the year.
Resilient beef demand in the second half of 2018 allowed wholesale choice beef cutout prices to avoid the seasonal third-quarter slump of 2016 and 2017, the USDA said. Prices held well above year-ago levels despite higher year-over-year third-quarter 2018 beef production and expected higher outturn in the fourth quarter.
The USDA beef cutout value averaged around $206.90 per cwt in the third quarter, up 3.5 percent from the same period last year.
US beef exports were record high at 826 million lbs. in the third quarter, up 11 percent from July-September 2017, and were up 13 percent year-over-year for the first three quarters. Third-quarter export increases mostly were to the markets of South Korea, Japan and Taiwan, the USDA. said, although exports to Hong Kong increased in September after five consecutive months of below-year-ago levels. The USDA raised from October its fourth-quarter 2018 beef export forecast by 15 million lbs. and raised its 2019 export forecast by 20 million lbs.
Strong domestic and export demand also has supported pork prices amid record production, although unlike beef, values are down from a year ago. The third-quarter pork cutout averaged around $73.67 per cwt, down 18 percent from a year earlier. The USDA forecast fourth-quarter US pork production at a record 7,035 million lbs., down slightly from the October forecast but up 3.5 percent from 2018. Pork production for 2018 was forecast at a record 26.3 billion lbs., down 105 million lbs. from October but up 2.9 percent from 2017, due to “recent and ongoing industry expansion.” For 2019, pork production was forecast at 27.7 billion lbs., up 5 percent from this year.
“It is especially notable that so far, pork demand appears to be more than keeping pace with production increases,” the USDA said, noting that fourth-quarter 2018 and 2019 pork ending stocks are expected to equal 7.5 percent of fourth-quarter production, both the lowest since 1990.”
As with beef, pork exports also have been strong. Third-quarter exports were 1,295 million lbs., up 5 percent from the same period last year, according to USDA data. Mexico remains the largest importer of US pork despite retaliatory tariffs that have been on most US pork items since early June, although third-quarter exports to Mexico were down 6 percent from last year. Third-quarter exports to China/Hong Kong were down 29 percent from a year ago but increases of more than 20 percent were recorded for South Korea, Colombia, Australia, Honduras and Dominican Republic. Still, the USDA left unchanged from October its November forecasts for fourth-quarter 2018 and full-year 2019 US pork exports.
Rabobank, in its recent Animal Protein Outlook for 2019, forecast 2019 US beef production up 3 percent and pork outturn up 5 percent from 2018. The US-China trade war, and the outbreak of African Swine Fever in China’s hog population will reduce pork supplies in China, the report said.