US – The USDA updated their World Agriculture Supply and Demand Estimates (WASDE) yesterday, a monthly proceeding that integrates new developments and data into the existing outlook for agriculture commodity markets. Prospects for the cattle and beef markets are a little brighter, reflecting the improvement in beef demand that surfaced during December, writes the Steiner Consulting Group.
Changes in the hog and pork market were centered on the 1 December hog population estimates that came in above expectations. Pork production in 2017 is expected to be up 5 per cent from 2016, about 1 per cent more than had been expected a month ago in the prior WASDE forecast release.
USDA views on poultry, egg and dairy output for 2017 showed small, insignificant changes.
The forecast of beef production in the last quarter of 2016 was adjusted upward 85 million pounds and then reduced by 95 million pounds in the first quarter of 2017. Cattle marketing rates from feedlots remained accelerated through November and December. Weather in key cattle feeding regions was favorable for cattle weight gains, leading to an efficient marketing pace at heavy weights, especially for steers.
Aggressive feedlot marketings during the last quarter of 2016 should come at the expense of cattle slaughter and beef production during the first quarter of 2017.
The WASDE executive summary also shed light on impressive beef and pork exports during November that raised the profile for exports of these products going into 2017. The average steer price for the last quarter of 2016 came in very close to the high end of the forecast range that was in place during the last half of the quarter. Some of this price strength can probably be tied to exports.
WASDE made a significant upward revision to it cattle price forecast for the first quarter of 2017 based on the combined effects of less cattle and beef production along with more beef exports. The second quarter 2017 beef production got a lift from November feedlot placements that were up 15 per cent from a year earlier, surpassing expectations. These placements should be marketed from feedlots this spring.
The USDA estimate of 5 per cent more pigs born during the September-November 2016 time frame took the market by surprise and lead to a WASDE pork production adjustment for the spring of 2017 of 215 million more pounds of pork than were expected in December. The price impact of the additional supply is partially offset by the improved outlook for pork exports.