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USDA Livestock, Dairy and Poultry Outlook

25 September 2015

USDA Livestock, Dairy and Poultry Outlook - September 2015USDA Livestock, Dairy and Poultry Outlook - September 2015

Livestock, Dairy and Poultry Outlook

High Exchange Rate Value of the U.S. Dollar Continues To Create a Drag on U.S. Red Meat and Dairy Exports

U.S. trade data released for the month of July suggest that the high-valued U.S. dollar exchange rate continues to create a drag on U.S exports of red meat and dairy products. USDA lowered its second-half 2015 export forecast for beef by 55 million pounds. While the second-half 2015 forecast for pork exports remains unchanged, July exports were lackluster, about half a percent lower than a year ago. Projected dairy exports were lowered from last month’s forecast on both the milk-fat and skim-solids milk-equivalent bases. While other domestic economic factors work to slow U.S. shipments abroad—strong domestic demand for U.S. beef and dairy products, for example—the high-valued U.S. dollar effectively reduces the competitiveness of U.S. products in foreign markets by raising their prices for foreign buyers. The extent of the appreciation of the dollar—and the challenge that it creates for U.S. animal products exports—is captured by the Federal Reserve’s broad dollar index.

Beef/Cattle: The USDA National Agricultural Statistics Service’s Cattle on Feed reported that July 2015 placements and marketings of cattle on feed in 1,000-plus feedlots were the lowest for July since the series began in 1996. The low marketing number may be due to the fact that many producers opted to keep cattle on feed longer, subsequently delaying marketings. This resulted in a 3-percent year-over-year increase in cattle on feed for August 2015.

Beef/Cattle Trade: USDA lowered second-half beef exports by 55 million pounds as the strong U.S. dollar and lower domestic production levels are together slowing shipments abroad. For 2015, U.S. beef exports are expected to be 2.3 billion pounds, 10.3 percent below a year ago. In 2016, beef exports are forecast at almost 2.5 billion pounds, 7.7 percent greater than in 2015.

Pork/Hogs: USDA lowered third-quarter pork production by 55 million pounds due to lower than expected slaughter rates and lower average hog dressed weights. The third-quarter live equivalent price of 51-52 percent lean hogs is expected to average $53-$54 per cwt. July pork exports were lackluster at half a percent below exports in July 2014. The Quarterly Hogs and Pigs report will be issued by USDA on September 25th. The report will give September 1 inventory and hog production information.

Poultry: The Outbreak of Highly Pathogenic Avian Influenza (HPAI) has had various impacts on the different segments of the U.S. poultry industry. In all cases (broilers, turkeys, and eggs), exports have declined. However, for broilers there was no downward impact on production, so stocks have risen and prices have fallen. Production has fallen for turkeys, but has been mostly offset by lower exports. The impacts on turkey prices vary depending on what percentage of a specific part goes to the export market. Egg production has also declined, and prices for eggs in the shell and egg products have risen sharply. Moving forward, price movements will depend on the gradual resumption of trade to a number of countries and restart of production at HPAI-impacted facilities.

Poultry Trade: Broiler, turkey, and egg shipments in July remained down from a year ago. Broiler shipments totaled 502 million pounds in July 2015, a decrease of 21 percent from a year earlier. Turkey shipments decreased 48 percent from a year ago, totaling 40 million pounds, while egg and egg product exports totaled 22 million dozen in July 2015, a 30-percent decrease from the previous July.

Dairy: Dairy export forecasts have been lowered due to recent trade data and higher expected competition in global markets. Import forecasts have been raised on a milk-fat milk-equivalent basis. Forecasts for the all-milk price have been raised to $16.80-$17.00 per hundredweight (cwt) for 2015 but lowered to $16.10-$17.10 per cwt for 2016.

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