USDA released four reports last week with implications for the livestock and grain markets/Allendale Inc.’s chief strategist, Rich Nelson, shares highlights and what it means for the pig, cattle, poultry, corn, soybean and wheat markets.
USDA's pork production estimate was increased by 35 million pounds this month on the supply/demand report. They now see 2016 output at 24.960 billion, 1.9 per cent over last year.
With no change in imports or exports, US consumers will have 50.1 pounds per person waiting for them this year, which is 0.8 pounds over 2015. Don't forget, this is on top of the 7.1 pounds increase we shoved on their plate in 2015.
There was nothing but good news for beef in the back pages of the January supply and demand report. 2016 production was cut by 75 million pounds as USDA noted that placements have been hit hard in recent months. They now see beef production this year at 3.8 per cent higher than 2015.
USDA has fixed their excessively high estimates of beef production in Q1 and Q2, now +0.7% per cent and +1.7 per cent vs. 2015. It could be argued that there might still be a more to take off that Q2.
Also supportive, they took off 100 million pounds from their previous import number and added 50 million pounds to exports. They now see the amount of beef left for the US consumer, which is the determinant of price, at 0.7 per cent higher than last year. That increase is down from recent months.
On the bearish side, we still have not fixed our meat supply problem. Gains in USDA's estimates of chicken, pork, and turkey production offset today's beef decline. The consumer was faced with 4.4 per cent more meat in 2015 than 2014. We will add 1.3 per cent to that tonnage in 2016.
USDA added 50 million to their chicken production estimate, now 40.950 billion. On top of that, a 125 million decline was noted for exports. This helped push the increase in chicken per capita up from a 0.8 per cent increase in 2016 to now a 1.3 per cent increase. This is on top of the massive 6.8 per cent increase posted in 2015 vs. 2014.