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CME: Beef Production for W42 Estimated to be Higher Compared to Last Year

16 October 2018

US - While overall meat supplies in the US continue to expand, growth last week was up just 2 per cent compared to a year ago, reports Steiner Consulting Group, DLR Division, Inc.

Beef production for the week was estimated at 527.6 million pounds, 3 per cent higher than last year. Pork production was actually 1.9 per cent lower than a year ago while chicken and turkey production were 3.9 per cent and 4.8 per cent higher, respectively.

Last week, USDA released the latest issue of its semi-annual review of global production and trade . A lot of work and effort goes into producing this report and it remains a key reference point for analysts in many countries.

The table below was reproduced from the report and it provides a quick summary of production and export expectations for the three main players in the global meat protein market.

USDA World Trade Forecasts for 2019

Prepared and Presented by USDA-FAS

Web: https://apps.fas.usda.gov/psdonline/circulars/livestock_poultry.pdf

 

USDA currently expects global beef exports next year to be around 10.576 million MT (carcass wt. basis), marginally higher than what is forecast for 2018. Exports from Australia are expected to decline by 120k MT or 7.3 per cent.

There is a lot of uncertainty at this point about Australian production next year. Drought conditions have worsened in recent months and this has forced Australian producers to send more cattle to market.

The cattle herd has been slowly expanding in Australia but drought has put expansion on hold. The forecast above implies some improvement in weather conditions, which would cause producers to once again limit the number of females they send to market.

Feed prices in Australia remain very high as drought has impacted not just pastures but also feed wheat and barely production. Feed supply availability will be critical for the Australian industry next year.

The issue is of particular interest for US end users, since the US is both a large exporter and importer of beef. Please note that even as Australian beef exports increased this year due to drought, US beef imports were little changed.

Strong demand in Asian markets and lower Australian exports would significantly limit the amount of Australian beef available in the US next year. The last USDA WASDE report had beef imports next year higher than in 2018. That may be difficult to achieve if Australian exports decline by 7.3 per cent and China beef consumption continues to expand to the degree it did this year.

Below, we have included our regular weekly update, which summarizes prices and production for the past week. Please note that some of the prices are preliminary since actual day prior data for Friday were not released until yesterday. The production numbers in the attached table are worth noting.

 


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