Meat, poultry supplies expected smaller in 2009

by Ron Sterk
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KANSAS CITY — With meat export demand waning and downsized beef and pork herds and poultry flocks a reality mainly due to soaring feed costs the past two years, total meat protein supplies in 2009 are expected to decrease from 2008.

At the same time, meat protein demand is expected to suffer as the strong dollar makes U.S. supply more costly in the world market and the recession limits consumption domestically and globally.

Drastically lower corn and energy prices came too late in 2008 to stave off cutbacks in beef, pork and poultry production in the second half of this year, which will carry over into much of 2009. But smaller meat supplies ultimately should be positive for prices.

"Once the economy stabilizes, we could have all-time highs in beef and pork prices by the end of next year," said Dan Basse, market research manager for Ag Resource Consulting Group, Chicago. He expects tight meat supplies through most of 2009.

However, while he saw meat prices improving in the U.S. next year, Paul Meyers, vice-president of commodity analysis for Connell Purchasing Services, Berkeley Heights, N.J., said he was "reluctant to predict record high meat prices due to the recession."

In its Dec. 11 World Agricultural Supply and Demand Estimates (WASDE), the U.S. Department of Agriculture forecast lower total U.S. red meat and poultry production from November for both 2008 and 2009. Total 2009 beef, pork and poultry outturn was forecast at 93,101 million lbs in December, down 313 million lbs from its November projection and down 1,033 million lbs, or 1%, from 94,134 million lbs in 2008, which was reduced 316 million lbs from November.

Projected 2009 meat production still was well above 2007 outturn of 91,265 million lbs, and 4% above the recent five-year average of 89,432 million lbs.

Per capita disappearance of red meat and poultry was projected by the U.S.D.A. at 216.6 lbs, on a retail basis, for 2009, down a half pound this year and compared with the four prior years that were at least 221 lbs.

Beef production was forecast by the U.S.D.A. at 26,540 million lbs in 2009, down 49 million lbs from 2008 and below the recent five-year average of 25,679 million lbs. Per capita disappearance was forecast at 62.1 lbs, down 1% from 2008 and down 3 lbs, or 5%, from the five-year average of 65.1 lbs.

"Adverse effects from the current economic downturn are being felt throughout the cattle and beef sectors as the negative effects of declining beef demand overwhelms the positive effects of declining grain prices," the U.S.D.A. said in its Dec. 18 Livestock, Dairy and Poultry Outlook.

Although corn prices last week were about 50% below record highs in late June and were about 10% below year-ago values, the declines have not been enough to counter downward pressures "ultimately tied to declining domestic and foreign demand for beef," the U.S.D.A. said.

While beef exports, at 1,920 million lbs, are projected to increase 3% from 2008, shipments still are short of the pre-bovine spongiform encephalopathy volume that exceeded 2,500 million lbs in 2003.

Pork production next year was forecast at 23,125 million lbs, down 294 million lbs from 2008, but still 1,602 million lbs, or 7%, above the five-year average of 21,523 million lbs. Per capita pork disappearance was forecast at 50.2 lbs, up almost a pound from 2008 as heavier marketing hog weights offset smaller numbers, the U.S.D.A. said.

After hitting a record high of 4,769 million lbs in 2008, topping the previous record set in 2007 by 52%, pork exports are projected to retreat 14% in 2009, to 4,100 million lbs, amid "expectations for continued slower economic growth next year in important foreign markets for U.S. pork," the U.S.D.A. said.

Broiler production in 2009 was forecast at 36,525 million lbs, down 470 lbs from 2008 but still 3% above the five-year average of 35,610 million lbs. On a per capita basis, broiler disappearance was forecast at 83.9 lbs, down a half pound from 2008 and down 1.4 lbs, or 2%, from the five-year average of 85.3 lbs.

Broiler exports, forecast at 6,150 million lbs next year, are expected to drop 9% from the current year as "all the uncertainties in the global economy have combined to sharply reduce the demand for broiler exports," the U.S.D.A. said.

As in grain, equity and financial markets in general, much uncertainty remains in the meat and poultry industry, with much of the struggling industry’s recovery based squarely on the overall economic recovery in the United States and around the world.

This article can also be found in the digital edition of Food Business News, December 23, 2008, starting on Page 30. Click here to search that archive.

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