Economic Uncertainty Impacts Livestock, Poultry Prices

Latest USDA livestock outlook yields mixed news for consumers and producers.

WASHINGTON, D.C., Jan. 22, 2009 -- The livestock outlook released by the United States Dept. of Agriculture (USDA) today was a mixed bag of predictions, saying the poor economy would soften demand in most markets in the first part of 2009, which should net consumers lower prices. But it also mentioned declining production costs and supply levels as bright points for producers, predicting a general strengthening of price support by the years end.

The report says pork and lamb prices will remain stable throughout 2009, claiming a reduction in demand due to national economic conditions.

Poultry prices are expected to continue to decline for the first half of the year, causing a decrese in production which should swing prices higher by years end.

Egg prices, already fairly high, are predicted to climb slightly in the first quarter, then decline seasonally.

Beef prices, consumer friendly of late, are predicted to rise as production levels fall and exports increase, lowering the supply.

Detailed excerpts from the report follow, as well as a link to the complete report.

Pork/hogs:
Recession-squeezed consumer budgets will likely constrain increases in pork and hog prices this year, despite expected reductions in production foreshadowed by the December 1 Quarterly Hogs and Pigs.

Lamb:
Fourth-quarter 2008 commercial production of lamb and mutton is estimated at 42 million pounds, about 13 percent below the fourth quarter of 2007. Lamb and mutton
imports, which in the past have offset tight domestic supplies, are also forecast to slow considerably in the fourth quarter. Despite tight supplies, prices were unable to break out of the price range held for most of 2008 due to the softer-than-expected fourthquarter demand.

Poultry:
With continued lower chick placements, broiler meat production is expected to
decline in fourth-quarter 2008 and through the first three quarters of 2009. With falling production, prices for many broiler products are expected to gradually show some upward pressure, but will be held back at first due to high stock levels. Whole turkey prices remained relatively strong through the end of December. Whole hen turkey prices averaged 87 cents per pound in the fourth quarter and 88 cents per pound in 2008, the fifth consecutive year that average prices have risen. Egg prices remained at relatively high levels through the end of 2008, as a continued smaller table egg laying flock has resulted in lower production. Egg prices in 2009 are expected to gradually strengthen through the Easter period and then decline seasonally.

Beef:
Both commercial cow slaughter and calf slaughter remained at high levels
throughout 2008 relative to total U.S. cow inventories. These slaughter levels will likely result in lower production for 2009 and beyond, potentially providing support for fedcattle prices. Lower prices for energy and feed could mitigate cow and cattle-feeding inventory declines to some extent, while increased exports of U.S. beef could provide further support for cattle and beef prices.

Download the complete report here.