CME: US Sees Record First Half of 2016 for Meat Production

US - Before getting into the topic of the day, we remind readers that USDA’s National Agricultural Statistics Service (NASS) has some important reports being released this week, write Steve Meyer and Len Steiner.
calendar icon 20 July 2016
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On Thursday, the monthly Livestock Slaughter report comes out. Friday afternoon brings the monthly Chicken and Eggs report. Importantly, from a market watcher perspective, Friday afternoon has two more monthly reports bunched-up – Cattle on Feed and Cold Storage.

Those of you that have looked at the NASS calendar and are anticipating the mid-year (1 July) Cattle report will be disappointed, USDA gave notice on 4 March, indicating that for fiscal reasons the report was being suspended.

That report gave the first estimate of the size of the calf crop, allowed estimation of feeder cattle supplies outside feedlots, national herd changes, etc. That report provided important indications of year-over-year changes.

Consistency in that type of report is critical and it had been suspended once before (2014’s), which is probably not a good sign for those that are interested in understanding fundamental factors impacting this industry, in a timely way.

Moving on to the topic of the day, for the first six months of 2016, US production of red meat and poultry was larger than posted in any prior year. The prior record was set in 2008.

However, the rate of change year-over-year is the important market driver not the absolute level; the year-over-year increase in the first half of this calendar year was 2.9 per cent.

For the 20 year period beginning in 1989 through 2008, record large US total red meat and poultry production for the first six months of the year occurred 17 times. So, historically record levels of production are rather normal.

As usual in recent decades, US chicken production had the largest production level; Ready to Cook production for January-June of this year was nearly 20.3 billion pounds, 2.9 per cent above the same timeframe in 2015.

Next was pork at 12.2 billion pounds (carcass weight), followed closely by beef at 12.1 billion pounds. Note that in no previous January-June timeframe has the US produced more pork.

Importantly, the year-over-year gains in pork and beef tonnage were 0.9 per cent and 5.2 per cent, respectively.

US turkey production was about 2.9 billion pounds and has been recovering from the avian influenza-caused reductions last year and was 3.1 per cent above 2015’s for the first six month of 2016.

At about 77 million pounds, commercial lamb production in January-June was essentially unchanged from a year ago, while veal dropped (down 6.9 per cent year-over-year).

We now shift to calculating per person disappearance of red meat and poultry for the first six months of this year. Using the Livestock marketing Information Center (LMIC) projections on imports and exports for June, estimated per person disappearance on a retail weight basis was 105.6 pounds. That was up 3 pounds from 2015’s and the largest since 2008 (108.2 pounds).

So, even though production was record-large, product available per person in the US was not. Note that people don’t actually eat nearly that much per person because of three major factors: 1) purchased weight (retail) includes bones; 2) use by family pets is included (purchased meat and poultry in pet foods/meals); and 3) waste (uneaten at home and unsold food by both grocery stores and restaurants). Of course, the estimated retail weight disappearance also is a pre-cooked amount.

The second half of 2016 is expected to continue the trend of year-over-year increases in total US red meat and poultry production.

At about 213 pounds (retail weight), per capita red meat and poultry disappearance in calendar year 2016 is forecast to be about 2 pounds above 2015’s. As with the first six months of 2016, that would be the largest since 2008.

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