If it produces meat, milk or eggs, and you produce it with the intent of profitability, it will be spotlighted today. USDA's new reports on livestock, meat prices, and the feed outlook are all the focus for livestock producers who have had a tough time lately making ends meet. Is there anything to be encouraged about?
       
       Hog prices are forecast to average $38-39 per cwt in the third quarter of 2009, 33% below year ago levels, fade to $35-37 in the fourth quarter, which would be 14% under 2008 levels. USDA’s latest Livestock Outlook says demand is lackluster, both from domestic and foreign consumers, and will not support the market at profitable levels. Returns turned negative 2 years ago, and have only been positive for two months in 2008. Sow slaughter is rising, which would reduce the breeding herd. The export market had carried many producers, but exports have been lower and imports higher than year ago levels.
       
       Poultry production is level to slightly down, with broiler meat production about 3% lower than last year, and chick placement is down 2% from the same period in 2008. Broiler stocks are also down 7% under year ago levels, but are running counter to wholesale prices. Broiler exports are also down 13% from last year, and that has reduced wholesale prices of leg quarters. While broiler exports are down, broiler meat exports are up about 1% over last year. Additionally, turkey production is down about 10% from year ago levels, despite the fact cold storage holdings have increased, putting downward pressure on prices.
       
       While beef imports are up 13% over year ago levels, beef exports are steady from last year, and a primary reason is the value of the dollar versus the Australian currency where most of the imported beef is originating. USDA says exports are expected to fall 8% this year and increase 7% next year. Live cattle imports currently are 16% less than last year, compared to USDA's earlier forecast for a 12% in imported calves. Most have been coming from Mexico, where moisture has been insufficient to sustain pastures. For the US beef producer, grain prices are more favorable than the past two years and the weather has extended the grazing season. Cow slaughter has increased due to dairy prices, feedlot placements were up 13% over year ago levels, but fed cattle prices in the low to mid $80 range will barely cover costs for feeder calves place on feed this month.
       
       Dairy cow slaughter has removed 145,000 head, but US milk production remains virtually unchanged from August of 2008. But low prices have not brought a decline in production that would balance supply and demand, in part because of lower feed prices that have kept up the interest of dairymen in continuing to produce milk.
       
       Lower feed prices have encouraged many livestock producers to stay in business, and large US new crop yields are expected to support that trend. USDA's Feed Outlook says, "With larger feed grain production, all 2009/10 feed grain prices are projected lower." Total feed grain use will reach a record this month, in part because of a higher number of grain consuming animal units compared to last month, but down 1.7 million from year ago levels. For the livestock feeder, the best news is a record corn yield forecast and corn prices half of what they peaked at in early 2008. Additionally, sorghum production will be more than previously forecast, but still down from last year.
       
       Global feed production is down, despite the larger US production. There is a reduction in Chinese and Canadian corn production due to growing conditions, and a reduction in Brazilian corn production because of stronger soybean prices. Argentine corn production is also down because of prices and government policies. Globally, increased use of feed grains will trim projected ending stocks. USDA says, "The combination of increased world corn trade and reduced competition boost prospects for U.S. October-September 2009/10 corn exports 3.0 million tons this month to 56.0 million. As of September 3, 2009, outstanding export sales of corn reached 12.1 million tons, up from 11.9 a year earlier."
       
       Summary:
       US livestock production will continue at high levels for the foreseeable future. While dairy cow slaughter is up, milk production is steady due to higher production per cow. There is a start on the increased slaughter rate for sows, but production of pork remains high. Beef production is also steady, but imports are up while exports are down due to currency values. Domestic feed supplies will be abundant with a large corn crop, giving producers less incentive to cut back on production.
       Source: CattleNetwork.com, September 22,2009