Ag sector as a whole will continue to adjust to lower prices with increased supplies in most crop and livestock segments.
Financial conditions in 2016 had many agricultural economists concerned about projected trends and the financial health of farm country. However, the resilience in the countryside has revealed a more moderate financial scenario that shows there are some bright spots, U.S. Department of Agriculture chief economist Rob Johansson told the 93rd annual USDA Outlook Forum.
“I think 2016 was much better than I thought it would be,” Johansson said. “When looking at farm income numbers last year at this time, I think (USDA) had projected lower farm income than we ended up with. Farmers were able to cut costs more than we thought.”
Johansson said South America was expected to have a good crop last year, but in actuality, its production output slipped, providing more support for the U.S. price floor when domestic production soared.
He said there is a concern that strong output is projected for South America, which could pressure domestic prices. “If South America has a good crop, prices will be lower than we projected,” he said.
During his presentation at the forum, Johansson projected that U.S. prices for most agricultural crops are expected flat to slightly higher for the 2017-18 marketing year. Corn prices are projected to edge up to $3.50/bu. for the 2017-18 marketing year, up 3% from last year but down more than 50% from the record-high price of 2012. Soybean prices are forecasted at $9.60/bu., up about 1.1% from last year but down about 35% from the record set in 2012.
Combined corn and soybean acreage is expected to be 178 million acres, up 0.6% from 2016. However, corn is expected to be down 4 million acres to 90 million as soybeans are projected to rise 4.6 million acres to 88.0 million.
Although prices for livestock, poultry and milk declined in 2016, lower feed costs and improved forage conditions provided the impetus for producers to expand flocks and herds. In the case of hogs and turkey, further support for growth reflects recovery from disease outbreaks in the U.S. that affected hog production in 2014 and turkey production in 2015.
“We project that total meat and poultry production will hit another record high of more than 100 billion lb. in 2017 as production of beef, pork, broiler and turkey all increase. Milk production is also projected to reach a record 217.4 billion lb. in 2017, with later-year herd expansion and growth in milk per cow,” Johansson said.
He said meat and poultry production in 2017 is projected to outpace demand, bringing with it lower prices for cattle and hogs, and broilers prices should be relatively flat compared to last year’s levels. Fed steer prices are forecasted to decline 7% as increased cattle supplies move through feedlots. Hog prices are expected to be around $44/cwt., down nearly 6%.
Dairy producers have the one bright outlook for 2017. Milk prices are expected to rise 11% from last year. “Despite large stocks and expanding supplies, solid domestic and foreign demand is expected to provide some support for product prices,” Johansson said. “Dairy producers, benefiting from low feed prices and improved milk prices, will see improved margins driving the herd expansion and growth in milk supplies.” Dairy prices are projected to be 2-3% higher in 2017.
Egg prices dropped 21.1% in 2016. Farm-level egg prices have trended upwards, with higher egg prices expected in the last quarter of the year. Egg prices are projected to decrease 3-4% overall in 2017 because production is expected to still remain high.
The value of U.S. meat exports is expected to increase in 2017 on increased trade volume in all major categories. Exports are expected to be up from last year as larger supplies and lower prices increase the attractiveness of U.S. products to foreign consumers.
However, a relatively strong dollar, Russia’s continued ban on imports of U.S. meat and relatively slow economic growth in a number of markets may also constrain export growth for meats. “Over the next 10 years, broiler exports are expected to grow by about 20%, pork exports are expected to expand about 22% and beef and veal exports are expected to grow by 37%,” Johansson said.
Source URL: http://www.feedstuffs.com/news/usda-ag-outlook-farm-economy-sentiment-improving
Great Plains Processing will be at the Purchasing and Ingredient Suppliers Conference (PISC) next week March 5th thru the 9th. If you have time to meet send us an email or give us a call and we can set something up.
Curt Beyer has joined the company as vice president of sales. Beyer will provide technical direction for product development and will lead strategic marketing and sales efforts.
Curt Beyer was born in 1965 and graduated with a Bachelor of Science degree in Agronomy from Mississippi State University in 1989. He worked as a Farm and Ranch Manager until he finalized production and research for a new rye-grass variety which earned him a graduate assistant-ship. He returned to Mississippi State University in 1991, obtained a second Bachelor of Science degree in Animal Science and graduated with a Master of Science degree in Ruminant Nutrition from Mississippi State University in 1993. Curt worked as a Feed Mill manager after graduate school then moved into the Liquid Feed business where he worked as a territory sales manager, formulations/technical service manager and quality control manager. He then worked as a territory sales manager selling premixes, feed additives and specialty products. Curt was working for Ducoa as a territory sales manager when Nutreco acquired Ducoa in 2001; he then transitioned into Trouw Nutrition USA a Nutreco company. Curt has worked in various technical and product management roles for Trouw Nutrition USA and assumed responsibility as the Protimax Technical and Product manager for the second time in January 2013. Curt lives on the Mississippi gulf coast (USA), he and his wife have one son, cattle, horses and a several dogs.
GPP purchases large quantities of raw materials to satisfy our customers’ orders and fulfill production needs on our own products. We are well equipped to distribute both raw materials and finished product to your company. GPP has supply agreements with many large raw material suppliers, and could help your business source its raw materials to receive a consistent supply at better prices without sacrificing quality. Visit our website for more information at GPP-co.com
Soy flour (GMO & non-GMO)
Soy isolate (GMO & non-GMO)
Cupric (copper) sulfate
Ferrous (iron) sulfate
Packaging sizes vary. Please call for more information regarding raw materials and packaging sizes.
Contact us to see how your operation can partner with GPP to receive high-quality raw materials for your production. Price breaks available.
We hope to see you there in a few short weeks! If you plan on attending please give us a call or send an email and we can schedule a time to meet.
-The team at GPP
For more information visit IPPExpo.com
JAN. 31 – FEB. 2, 2017
Georgia World Congress Center
285 Andrew Young International Blvd NW
Atlanta, Georgia USA
Various factors will determine where 2017 prices settle.
The most recent U.S. Department of Agriculture (USDA) “Hogs and Pigs” report indicated pork supplies in 2017 would likely be larger than pre-report expectations.
Purdue University livestock economist Chris Hurt said slaughter numbers have run high all fall and USDA revised upward the size of the spring 2016 pig crop by 2.5% to account for the heavier runs. In a similar fashion, the December survey also found more market hogs. The number of pigs that weighed less than 180 pounds was 4% percent larger than the inventory of a year ago and 2% percent larger than pre-report trade estimates. These will be the market hogs arriving at processing plants from January to May 2017, Hurt noted.
A similar story unfolded for the breeding herd, which was 1.5% higher and 1% more than pre-report estimates. Farrowing intentions were also above expectations. Winter farrowing intentions were 1.4% higher and spring farrowing intentions were 1% higher. Hurt said the expansion of the breeding herd has tended to follow the record corn yields, with the Illinois, Missouri, and North Dakota breeding herds up 10% and the South Dakota up 9%.
According to Hurt, the number of pigs per litter continued to march higher in 2016 with new records in each quarter. The last quarter of 2016 attained the highest level ever at 10.63 pigs per litter. For 2016, the new annual record was 10.5 pigs. Hurt said the average rate of annual increase over the past ten years has been 1.5%.
Given these numbers, Hurt said the industry will increase pork output by about 3% in 2017 to 25.7 billion pounds, a 12% increase since 2014 when PED reduced production and contributed to record high hog prices. He forecasted pork production will rise by 2% the first-half of 2017 and by about 4% in the last-half.
“Hog prices were extremely depressed in the final quarter of 2016 when live prices averaged about $37/cwt. That was the lowest quarterly price since 2003,” said Hurt, adding that the lowest prices were in mid-November, touching the extremely low $30s. “Recovery came quickly with prices rising to the lower $40s by the end of the year. For all of 2016 live hog prices averaged about $46.”
As for prices in 2017, Hurt said 3% higher production might mean annual prices will be lower. However, he said there are additional items to consider.
First, retail prices did drop in 2016, but there is opportunity for those prices to come down more. “Lower retail prices will stimulate the quantity of pork that consumers purchase.”
Second, Hurt said USDA expects exports to expand by 5%, which will move more of the increased production to foreign customers.
Third, with the addition of new processing capacity, the farm-to-wholesale margins are expected to drop, Hurt said. “Lower margins at the processing stage may contribute to stronger bids to hog producers.”
Live hog prices are expected to be about $48/cwt. in 2017, a $2 increase from 2016. Prices by quarter are expected to average $45/cwt. in the first quarter, the very-low $50s in the second and the third quarters, and then $43 in the final quarter of 2017. A range of $2 higher or lower would be reasonable for price projections, Hurt added.
Costs of production are expected to be around $50 on a live weight basis in both 2016 and 2017 based on current feed price expectations. Hurt pointed out that this means the industry operated at an estimated loss of about $12 per head in 2016 and is expected to have losses that average about $6 per head in 2017.
“Losses in the first quarter of 2017 are expected to be about $13 dollars per head. Modest profits may return in the second and third quarters, with a return to the largest losses of the year in the final quarter.”
Because the 2017 outlook is for weak returns, Hurt said it is important to keep further expansion to a minimum. “This will be difficult with new processing capacity coming in 2017 as those plants will want to stimulate some added production to fill their lines.”
Pork exports to China will particularly bear watching in 2017, Hurt said. Last year, exports to China nearly doubled growing to near 16% of total exports.
Trade positions of the Trump administration will also be of deep interest to the pork industry in 2017. Mexico became the number one destination for U.S. pork in 2015 and 2016, which Hurt said means trade relations with Mexico will need to be watched carefully for potential impacts on the hog market.
“Remember that a breeding herd that stays the same size will still enable a 1-2% expansion of pork production due to more pigs per litter and higher market weights. A 2% production growth rate is probably close to what is sustainable with modest U.S. population growth and some growth in exports.”
The December fed cattle future market was mostly lower this week after a long holiday weekend. Nearby contracts closed lower Tuesday at $114.875/cwt., posted gains Wednesday, but closed lower again Thursday at $115.075/cwt.
January feeder cattle futures were lower this week. Nearby contracts closed lower Tuesday and Thursday at $130.20/cwt. and $128.25/cwt.
For the beef cutouts this week, Choice and Select were lower at $201.52/cwt. and $193.39/cwt., respectively.
February lean hog futures started the week lower but climbed through the week. Nearby contracts closed lower Tuesday at $63.50/cwt. but closed higher Thursday at $64.875/cwt.
Pork cutout values were higher this week. The wholesale pork cutout was higher at $79.57/cwt. Loins were higher at $80.75/cwt. Hams and bellies were also higher at $62.02/cwt. and $118.16/cwt.
Hogs delivered to the western Corn Belt were higher this week, closing at $54.08/cwt. on Thursday.
The U.S. Department of Agriculture reported the Eastern Region whole broiler/fryer weighted average price at 85.54 cents/lb. on Dec. 30.
According to USDA, egg prices have been steady, with a lower to sharply lower undertone. Offerings and supplies have been moderate to heavy. Demand has been mostly light to moderate.
Large eggs delivered to the Northeast were unchanged at $1.10-1.14/doz. Prices in the Southeast and Midwest were higher at $1.21-1.24/doz. and $1.10-1.13/doz., respectively. Large eggs delivered to California were unchanged at $1.66/doz.
For turkeys, USDA said the market was steady to weak, with light to moderate offerings. Demand has been light. Prices were lower, at $1.00-1.02/lb. for both hens and toms.
Source URL: http://www.feedstuffs.com/markets/livestock-markets-more-pork-higher-hog-prices-ahead
Procedure developed for organizations interested in having their standards and programs verified.
The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) has developed a program under which it will offer assessments of independent animal welfare standards and programs to determine if they conform to the International Organization for Standardization (ISO) Technical Specification (TS) 34700 – Animal Welfare Management/General Requirements and Guidance for Organizations in the Food Supply Chain.
The ISO TS applies to terrestrial animals bred or kept for the production of food or feed and was developed to ensure that food-producing animals are raised, transported and processed humanely. The TS also establishes a strong framework for industry animal welfare standards and programs to verify that they are rooted in science and can be widely accepted.
AMS has developed a procedure for organizations interested in having their standards and programs verified against ISO TS 34700. AMS invites organizations interested in this service to review the procedure, “USDA ISO TS 34700 Animal Welfare Assessment.” AMS will work with interested organizations to develop additional program materials, including objective, transparent audit checklists. Programs will be verified through routine independent and on-site audits by AMS to ensure that they meet the requirements of ISO TS 34700.