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Study: Expect meat stocks to fall in 2012

By Staff | Nov 18, 2011


Farm News news editor

Beef and poultry stocks are anticipated to decline by at least 5 percent in 2012, meaning higher prices for the consumer.

That assessment was made earlier this fall by the Rabobank International Food & Agribusiness Research and Advisory Group.

Although beef and poultry supplies are likely to tighten, pork continues to be the “bright spot” in the U.S. meat supply, said Dave Holloway, the group’s vice president.

Rabobank, based in New York, is a community-oriented retail bank. Its report was received by agribusinesses in October.

Beef outlook

Beef production could drop as far as 7 percent in the coming calendar year, Holloway said, due in part to the severe drought conditions in Southwestern U.S., forcing massive herd culling, and higher feed costs.

Herd culling has been ongoing for the past two years, Holloway said, because of aging producers. “2010’s high cull cow prices was an easy strategy to sell cows and get out.”

Then the 2011 drought hit, causing more herd reductions and a smaller feeder calf market for replacements.

The result will be fewer prime cuts of beef available to the consumer, causing a short supply and possibly a temporary price jump.

Holloway said that as prices go up, consumption of high-end beef products will drop.

“The economy affects price more than supply,” Holloway said.

The group’s report anticipates U.S. consumption of beef to drop by 8 percent in 2012.

In the third quarter of 2011, he said, the beef industry produced 6.8 pounds per U.S. capita, while consumption was at 6.63 pounds.

By third quarter 2012, Holloway said, beef production is expected to be at 6.4 pounds per capita, and consumption will fall to 6.36 pounds.

Poultry outlook

The report said the poultry industry “is suffering some of its worse-ever finaincial losses.”

Holloway said poultry stock will dwindle by 8 to 9 percent in 2012.

A portion of those losses has been curbed with larger birds for an expanded breast meat market.

In addition, heavier birds are said to make processing more efficient.

“The food service industry is absorbing larger birds,” Holloway said.

Pork outlook

Export growth for U.S. pork is propping up the market price, the report said.

Even with Iowa’s record number of hogs and pigs inventory – 20 million as of the U.S. Department of Agriculture report issued on Sept. 28 – Asian markets are buying more pork, which is good for Iowa producers.

“Selling more pigs for higher prices,”?Holloway said.

In fact, he expects the 2012 market price to grow by another 10 percent over 2011.

He added that the rising income levels in Asian markets, especially China, has a demand growth that is outpacing the current production growth in this country.

Corn outlook

Finally, the report indicates that livestock numbers may increase again as corn prices are expected to decline in 2012.

Reduced demand, as a result of smaller herds and flocks, will draw down the corn costs, making feeding less expensive.

Contact Larry Kershner at (515) 573-2141, Ext. 453 or at kersh@farm-news.com.

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