The charts provide a summary of the latest update. The charts in the first column illustrate the degree to which the latest USDA WASDE forecasts have been revised compared to the previous month. We show both the percentage change as well as the actual volume. The second column of charts then shows how much USDA expects 2016 red meat and poultry supplies to change from the previous year.

Beef revisions: USDA once again revised lower its forecasts for US beef supplies and availability in 2016.

Remember that in the December report USDA lowered its production forecast by 0.7 per cent. In this report they lowered the production forecast by another 0.3 per cent (75MM pounds).

The lower production forecast combined with higher exports and lower imports implies that overall beef availability in 2016 will be about 225 MM pounds or 0.9 per cent lower than earlier forecast. In December, availability was also revised 0.9 per cent lower.

Thus, in the last two months USDA has made some very significant downward revisions to supply projections for 2016 and yet futures markets continue to hold a very bearish view of fed cattle prices, especially for the second half of 2016.

October 2016 fed cattle futures are currently priced at around $121/cwt. In early November 2015 this futures contract was trading around $132/cwt.

To be sure, beef supplies are expected to increase in 2016, with USDA currently projecting domestic beef availability to be up 1.4 per cent compared to the previous year. But it appears to us that futures at this time are not just pricing the impact of higher beef supplies.

Rather, they also appear to be pricing the impact of much lower meat protein prices, sharply lower commodity prices and the potential for a dramatic global slowdown that could disproportionately impact beef prices.

The USDA downward revision of beef supplies recognise that while production will start to increase, this is not going to happen as fast as some may have initially thought/hoped.

Pork and poultry revisions: USDA made very minor revisions to its 2016 pork supply/demand forecasts. Pork domestic supply availability was revised 0.3 per cent thanks to a 35 MM pound increase (+0.1 per cent) in pork production and also an adjustment in ending stocks.

While the latest Hogs and Pigs report showed smaller than expected farrowings, it also told us that the breeding herd remains much larger than a year ago and productivity gains will likely offset the impact of lower farrowings.

Total pork production in 2016 is forecast up 1.9 per cent from the previous year while domestic availability is expected to increase 1.3 per cent.

Chicken supplies were heavy in 2015 and USDA projects chicken supplies will be more than adequate in 2016.

Domestic availability was revised 0.5 per cent higher from the previous forecast, largely because 2016 export forecasts were lowered by 125 MM pounds.

USDA now expects chicken exports to be up just 3.6 per cent in 2016 following a 12 per cent decline the previous year. Exports will remain a key driver for the chicken (and overall meat markets) in 2016.