US Meat Production, Trade Expected to Increase in 2016

US - The main message of the USDA's “Livestock and Poultry: World Markets and Trade” report is production and trade of all meats is expected to expand in 2016, write Steve Meyer and Len Steiner.
calendar icon 14 October 2015
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This biannual report is published in April and October and includes data on US and global trade, production, consumption and stocks, as well as analysis of developments affecting world trade in livestock and poultry.

The main message of the report is production and trade of all meats is expected to expand in 2016.

Export growth is expected based on increased production creating downward pressure on prices, incentivising increased consumption on a global scale. While red meat and poultry exports have been disappointing from a US perspective so far this year, the FAS report issues expectations of improved conditions in the future.

Starting with the beef complex, herd expansion in the US, Brazil and India will lead the way in expanding world beef production an expected 1 per cent. More favorable moisture conditions in Australia will move them towards rebuilding cattle herds, pushing slaughter lower and their beef prices higher.

This should create some opportunities in the global market place, especially in Asia, for the US to become more competitive. As the US herd expansion continues, beef supply will increase and put downward pressure on prices.

Brazil is also continuing herd expansion, and the weaker real creates cheaper Brazilian beef relative to other markets.

India still holds the spot of the top beef exporting country, however as a reminder India’s cattle herd largely consists of water buffalo, not traditional beef, and their top export destinations include the Middle East, Southeast Asia, and North Africa.

Overall, into 2016 the US continues to be the top beef producer with a forecasted 11.4 million metric tons (mmt) - carcass weight equivalent, followed by Brazil (9.4 mmt), European Union (7.5 mmt), China (6.8 mmt), and India (4.2 mmt).

Leading countries in beef exports with forecast 2016 volumes are India at 2.2 mmt, Brazil at 1.8 mmt, Australia at 1.6 mmt, US at 1.1 mmt, and New Zealand at 0.6 mmt.

Moving on, world pork production for 2016 is forecast to be nearly unchanged.

China pork production is forecast to stall, with an increase in weights offsetting a decrease in slaughter, but marginal expansion is expected from most other major producing countries. China is by far the largest pork producing country at 56.5 mmt expected in 2016.

Forecast production in 2016 in the EU is a far second at 22.9 mmt, the US at 11.3 mmt, and Brazil at 3.5 mmt. Slight increases in pork purchases by major importing countries is expected to offset continued declines in Russian pork purchases.

The US is the only country expected to experience significant growth in pork exports in 2016, and if realised will surpass the EU in total pork exports. The US has been following in second since PEDv production issues affected the industry in 2014, and is expected to stay in that position through 2015.

On broiler meat the report forecasts global production to increase 2 per cent in 2016 to a record volume of 89.3 mmt. The increased production will occur in most major producing countries.

The top broiler producers are, in order, the US, Brazil, China, EU, and India. Broiler meat exports are forecast to rebound more robustly (on a percentage basis) than production, up 4 per cent in 2016, and driven by the increase in production and lower prices compared to other animal proteins.

US broiler exports are expected to increase 8 per cent in 2016 compared to 2015. U.S. exports are currently lagging 11 per cent through August compared to 2014, that turnaround would be a welcomed change.

Specifically regarding US animal protein imports, year-over-year decreases are forecast in 2016 for beef, pork, and broiler meat, with the largest percentage decrease in beef imports (down 11 per cent).

This is no surprise as there are consistent indications of a growing cattle herd, that will allow the US to realise a larger beef supply largely starting in 2016 and into 2017.

Additionally, most of US beef imports come from Australia, and as their slaughter numbers decrease US purchases of Australian beef will decrease as well.

On a side note, the report referenced in this DLR issue also includes an excellent article titled: Review of US Tariff Rate Quotas for Beef Imports.

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