outlook for the u.s. meat sector in 2011 presented by shayle d. shagam world agricultural outlook...

Outlook for the U.S. Meat Sector in 2011

Presented ByShayle D. Shagam

World Agricultural Outlook BoardU.S. Department of Agriculture

Outlook 2011Canberra, Australia

March 2, 2011

Situation Facing Livestock and Poultry Producers in 2011

• Higher feed prices– Corn: $5.60/bu in 2011/12

$5.05-$5.75/bu in 2010/11 $3.55 in 2009/2010

– Soybean meal: $360/short ton

$340-380/ton in 2010/11 $311 in 2009/2010

• Shrinking returns

Higher Feed Bites into Gains in Livestock and Poultry Prices

0

10

20

30

40

50

60

2001 2003 2005 2007 2009 2011*

Rat

io

Cattle/Corn Hog/Corn Broiler/Feed* Forecast

Highlights for Livestock & Poultry in 2011

• Offsetting meat production– Beef, lamb & mutton, and turkey lower– Pork and broilers higher

Red Meat and Poultry Production Will Increase 0.1 Percent in 2011

05

101520

2530354045

2002 2004 2006 2008 2010

Mil

lion

met

ric

tons

.

Poultry Beef Pork Other * Forecast

Total Meat Production Fractionally Higher in 2011

Million metric tons 2010 2011 % Change

Beef 11.938 11.755 -1.5

Pork 10.177 10.219 0.4

Broiler Meat 16.739 16.919 1.1

Total Red Meat And Poultry 41.777 41.804 0.1

Highlights for Livestock & Poultry in 2011

• Offsetting meat production

• Stronger red meat exports but weaker broiler exports– Rising incomes fuel increased demand for

meat protein – Relatively weak U.S. dollar will support meat

exports– Trade issues remain irritants

Million metric tons 2010 2011 % Change

Beef 1.043 1.064 2.0

Pork 1.917 2.121 10.6

Broiler Meat 3.072 3.016 -1.8

Red Meat Exports Higher in 2011

Red Meat Exports Represent Increasing Share of Production

0

5

10

15

20

25

2001 2003 2005 2007 2009 2011*

Per

cen

t

Beef Pork Broilers* Forecast

Highlights for Livestock & Poultry in 2011

• Offsetting meat production

• Stronger red meat exports but weaker broiler exports

• Domestic supply impacts mixed– Larger broiler meat net supplies– Smaller beef, pork, and turkey net supplies

Total Per Capita Retail Basis Meat Disappearance in 2011 at about 94 Kilos

10

15

20

25

30

35

40

45

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

*

Kil

ogra

ms

per

cap

ita

Beef Pork Broilers* Forecast

Highlights for Livestock & Poultry in 2011

• Offsetting meat production

• Stronger red meat exports but weaker broiler exports

• Domestic supply impacts mixed

• Gradual economic improvement– U.S. GDP growth about 3 percent– Unemployment gradually declining

2010 2011 % Change*

Cattle, $/cwt

($/100kg)95.38(43.26)

102-109(46-49)

10.3

Hogs, $/cwt

($/100kg)55.06(24.97)

58-61(26-28)

8.1

12-City Broilers, ¢/lb

(¢/kg)

82.9(37.6)

80-85(36-39)

-0.5

Livestock & Poultry Prices Mostly Higher in 2011

* At midpoint

Despite Price Increase, Chicken Will Maintain Pricing Advantage at Retail

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1997 1999 2001 2003 2005 2007 2009 2011*

Ret

ail

Pri

ce R

atio

s

Beef/Chicken Beef/Pork Pork/Chicken

* Forecast

Cattle Herd at 92.6 Million on Jan 1, 2011; Further Contraction Likely

80

85

90

95

100

105

110

115

120

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

*

Mil

lio

n H

ead

* Forecast

Beef Cows 1 Percent Lower Jan. 1, 2011. Calf Crop Declines in 2010

30

32

34

36

38

40

42

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011*

Beef Cows Calf Crop

Mil

lion

Hea

d

* Forecast Calf Crop

10

15

20

25

30

35

40

45

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Outside Feedlots On-Feed

Cattle for Feeding Lower on January 1M

illi

on H

ead

-3.3%

+2.8%

-1.3%

Cow Slaughter Will Decline In 2011

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

Beef Dairy Total

* Forecast

Mil

lio

n H

ead

Cattle Imports Decline to 2.1 Million Head In 2011

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

Canada Mexico Total

* Forecast

Mil

lion

Hea

d

Herds in Canada and Mexico Shrink

Cattle and Calves January 1

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 2011

Canada Mexico

Mil

lio

n H

ead

Average Cattle Carcass Weights Near Record in 2011

325

330

335

340

345

350

355

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

* Forecast

Kil

og

ram

s

Beef Exports Increase 2 PercentBeef Imports Increase 4 Percent

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

Exports Imports

* Forecast

Mil

lio

n m

etri

c to

ns

2010 Exports Higher to Several Major Markets

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2005 2006 2007 2008 2009 2010 2011*

Mill

ion

met

ric t

ons

Mexico Canada Japan South Korea Vietnam Other

* Forecast

Additional information about the 2011 outlook is available at the following websites:

• World Agricultural Outlook Board (WAOB)World Agricultural Supply and Demand Estimates– www.usda.gov/oce/commodity/wasde/index.htm

• Economic Research Service (ERS)Livestock, Dairy, and Poultry Situation and Outlook– www.ers.usda.gov/publications/ldp/

• Foreign Agricultural Service (FAS)Livestock and Poultry: World Markets and Trade– www.fas.usda.gov/dlp/livestock_poultry.asp