US - The latest USDA monthly production statistics continued to highlight the resurgence in meat production following significant declines in red meat supplies during 2014 and the first half of 2015, write Steve Meyer and Len Steiner.
As regular readers of the report well know at this point, we tend to look past the headlines in the USDA report because, if that is all you looked at, you would get the wrong impression.
Case in point, the USDA report highlight pointed out that “beef production, at 1.95 billion pounds, was 1 per cent below the previous year.”
This is indeed a true statement (actually the decline was 0.5 per cent) - someone reading this would conclude that beef supplies continue to decline.
However, there was one less slaughter day in January 2016 compared to January 2015 and one needs to adjust for this in order to have a proper understanding of the supply of beef coming to market.
After all markets are trading and pricing product on any given day production is running, they do not price based on what was produced for that month.
Another way to headline the report could have been: “average daily beef production, at 97.7 million pounds, was 4.4 per cent higher than the previous year.”
This gives you a very different perspective of beef supply availability last month.
Below are a few other highlights from the report:
- Cattle slaughter at 2.359 million head declined 2.5 per cent in January compared to the previous year. Adjusted on a slaughter day basis, cattle slaughter was 117,930 head, 2.4 per cent higher than the previous year. As noted above, average daily beef production was up 4.4 per cent compared to a year ago. Since September, daily beef production has averaged 1.9 per cent compared to the same period a year ago. This increase followed 26 consecutive months of year/year declines in daily beef production. It helps explain in part the change in the dynamics of the beef market. The January increase is the biggest since December 2010.
- Total hog slaughter in January was 9.744 million head, 0.2 per cent lower than the previous year. Talk about giving the wrong impression. On a per slaughter day basis, hog output in January was 487,230 head, 4.8 per cent higher than a year ago. A careful observer would note that this implied daily slaughter number also is not exactly correct. Some hogs are slaughtered on Saturday and that Saturday slaughter is added to the weekly number. Still, the daily adjustment goes a long way towards comparing apples to apples. Average sow slaughter per slaughter day was 11,620 head, 3.8 per cent higher than a year ago. This follows three months when sow slaughter actually declined by 3.4 per cent from the previous year. Is this the beginning of the decline in the breeding herd? Pork production at 2.084 billion pounds was 1 per cent lower than last year. Adjusted on a slaughter day basis pork production increased 4 per cent. Broiler production (on a slaughter day basis) also was up 2.6 per cent in January while slaughter was up 1.1 per cent, which fits with the weekly chick placement data.
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