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  • Beef: Declining dairy cow inventories, no growth in dairy replacement heifer inventories, and beef heifer inventories that are declining more rapidly than beef cow inventories imply continuing liquidation of the national cow herd. The other-heifer category contributes to short-term beef supplies, but the combination of reduced replacement heifer inventories, increased short-term heifer beef, and declining placements of cattle in feedlots will likely result in reduced beef supplies beyond 2009. Beef Trade: Beef exports declined slightly in the second quarter, as demand from Canada, Mexico, and South Korea remains weaker than last year. The United States imported 14 percent more beef in the second quarter, compared with 2008, mainly due to increased exports from Australia and New Zealand. Imports are expected to increase in 2009 and 2010. Poultry: After declining strongly in the first and second quarters of 2009, broiler meat production is expected to be only slightly lower than the previous year in the second half of 2009. With only a small decline in production and lower exports, the forecasts for broiler ending stocks were increased for the third and fourth quarters. Turkey meat production is expected to continue much lower than the previous year in second-half 2009, as poultry placements have been sharply lower than the previous year through the first 6 months of 2009. Pork: Summer prices for hogs and pork cuts continue to languish at year-over-year lower levels due to lackluster demand for pork products. Second-quarter pork exports were 31 percent lower than a year ago, largely due to lower demand for U.S. pork in Asia.

    Livestock, Dairy, and Poultry Outlook Kathryn Quanbeck Rachel J. Johnson Livestock Inventories Respond to Decreased Demand

    LDP-M-182 Aug 19, 2009

    Contents Beef Beef Trade Poultry Pork Sheep Dairy Stocker Cattle Production Risk Management Tools for Dairy Producers Contacts and Links Tables at a Glance Red Meat and Poultry Dairy Forecasts Web Sites Animal Production and Marketing Issues Cattle Dairy Hogs Poultry and Eggs WASDE

    -------------- Tables will be released on Aug 25, 2009 The next newsletter release is Sep 17, 2009

    -------------- Approved by the

    World Agricultural Outlook Board

  • 2 Livestock, Dairy, & Poultry Outlook/LDP-M-182/August 19, 2009

    Economic Research Service, USDA

    Sheep: The USDA Sheep report released on July 24, 2009, indicated a 3-percent decline in inventories. On July 1, 2009, the U.S. sheep and lamb inventory totaled 7.05 million head, or 220,000 head from 2008. Inventory reductions were seen in breeding sheep and lambs and market sheep and lambs, both down 3 percent. Ewes 1 year or older also declined 3 percent, but lambs under 1 year were replaced at the same rate as the previous year. Nearly 88 percent, or 3.25 million head of lambs, were born during the first half of 2009, and about 450,000 more lambs are expected to be born during the second half of this year. The decline in market sheep and lambs will continue to keep supplies tight for the rest of the year. First-half 2009 commercial lamb and mutton production was 84 million pounds, down nearly 6 percent the first half of 2008. Second-half 2009 commercial lamb and mutton production is expected to be just below the first-half at 83 million pounds, but still 2 percent below the second half of 2008.

    Dairy: Continued rises in milk per cow offset reduced herd size, slowing the rate of decline in milk production in 2009. Continued reductions in the national dairy herd will push milk production further below year-earlier levels in 2010. Imports are expected to rise slightly, and exports remain in decline. Growth in domestic commercial use remains slow this year and should continue slow next year. Some strengthening in prices is expected next year as milk production declines.

    Special Sections: This month’s LDP newsletter contains special boxes on stocker cattle production and risk management tools available to dairy producers.

  • Beef

    3 Livestock, Dairy, & Poultry Outlook/LDP-M-182/August 19, 2009

    Economic Research Service, USDA

    Cow-Herd Declines Imply Less Beef Beyond 2009 Crop conditions over much of the United States are quite favorable at this point. The far-Western United States is turning dry again, as South Texas and the western half of the Gulf Coast slip into extremely dry conditions. Some other areas, mostly scattered through the Central Plains and Upper Midwest, are also abnormally dry. Despite the generally good crop conditions, the cool summer and late start have resulted in crops being well behind normal. Hay production also appears to be sufficient to replenish stocks in preparation for winter supplemental feeding, and quality is good except for cuttings on which rain has fallen. Cattle in South Texas are being supplemented with hay. The NASS semiannual Cattle inventory report released on July 24, 2009 showed the July 1, 2009 total U.S. cattle and calf inventory 1.5 percent lower than the July 1, 2008 inventory, the lowest July 1 inventory in the series that began in 1973. The total U.S. cow inventory declined by 1.4 percent from the July 1, 2008 inventory, also resulting in the lowest July 1 inventory in the series that began in 1973. Total U.S. replacement heifer inventories declined by 1.2 percent. Beef cow and beef replacement heifer inventories declined by 1.4 and 2.2 percent. The more rapidly declining beef heifer inventories imply that the national beef cow herd will continue the current liquidation phase of a cattle cycle that began in 2005 (from an inventory that was low in 2004) and peaked in 2007. Consistent with declining beef cow and heifer inventories, the ratio of heifers to total steers and heifers on feed in feedlots of 1,000 head or more is the highest July ratio since July 2004. This ratio and the year-over-year decline in other-heifer inventories make beef-heifer retention for cow-herd expansion unlikely in the near term. Further, the declining cow and replacement heifer inventories indicate the potential for reduced placements of feeder cattle in feedlots over the next 2 or more years because of the impact these inventories have on future calf crops. July 1, 2009 dairy cow inventories declined by 1.6 percent, a reversal of recent milk cow inventory growth and the first decline since July 1, 2004. Milk replacement heifer inventories were unchanged from July 1, 2008, which suggests some level of producer expectations of dairy herd expansion because the July 1, 2009 milk replacement heifer inventory is based on a smaller milk cow herd (9.2 million cows) than the corresponding 2008 inventory (9.35 million cows). That is, the ratio of replacement heifers to the base cow herd in the July 1, 2009 inventories is 0.424 compared with the 2008 ratio of 0.417. However, continued poor returns will likely dampen most expansion plans. Despite the 1.6-percent decline in the dairy cow inventory, milk production will likely decline by a smaller percentage. This will occur because, in the national aggregate, higher producing cows likely were and will be retained (because their profit margins will likely be better), and those cows removed will probably be partially replaced in the aggregate herd by higher producing heifers. Both culling lower producing cows and retaining genetically superior milk-producing heifers are consistent with the positive growth trend in milk production.

  • 4 Livestock, Dairy, & Poultry Outlook/LDP-M-182/August 19, 2009

    Economic Research Service, USDA

    The general declines in both cow and heifer inventories have implications for beef production over the next several years, possibly into 2012 or beyond. To understand why, it is important to recognize that heifer inventories are divided into two categories, depending on the intended end use of the heifers—as either breeding females or as fed cattle. An increase in one category is at the expense of the other—that is, the fewer heifers kept for breeding, the more are available in the short run to go into feedlots for beef. This decision as to final heifer disposition is alterable to some extent, as it can be made at several points between the birth of the heifer and slaughter as a fed heifer. Generally, the decision is made between weaning and 1 year of age—when most weaned calves, both steers and heifers, spend some time growing on pastures—and before the nonbreeding heifers are placed on feed (see Stocker Cattle Production on page 20). Again, this decision regarding heifers has implications for longer term feeder cattle supplies and subsequent beef production. As heifers are fed for slaughter rather than retained as breeding females, short-term beef production increases. Then, during a future expansionary phase of a cattle cycle, increasing retention of heifers for breeding results in fewer heifers going into feedlots for beef production. This, combined with fewer steers available to be placed in feedlots due to reduced calf crops, results in declining beef production and often in high and volatile prices for fed cattle. Beef production from steers is affe

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