Outlook for the U.S.

Livestock and Poultry

Sectors in 2020

Presented By

Shayle D. Shagam

World Agricultural Outlook Board, USDA

USDA Agricultural Outlook Forum

Arlington, VA

February 21, 2020

Record Red Meat and Poultry Production in

2020

0

20

40

60

80

100

120

2011 2014 2017 2020*

Billio

n p

ou

nd

s

Poultry Beef Pork Other * Forecast

Total Meat Production Higher

Billion

pounds2018 2019 2020F

2019-20

% Change

Beef 26.872 27.151 27.480 1.2

Pork 26.315 27.637 28.885 4.5

Broiler

Meat42.601 43.877 45.775 4.3

Turkey 5.878 5.816 5.890 1.3

Total Red

Meat And

Poultry102.435 105.227 108.788 3.3

Billion

pounds2018 2019 2020F

2019-20

% Change

Exports

Beef 3.161 3.022 3.300 9.2

Pork 5.876 6.321 7.375 16.7

Broiler Meat 7.069 7.109 7.425 4.4

Imports

Beef 2.998 3.057 2.880 -5.8

Pork 1.042 0.945 0.835 -11.6

Large Meat Supplies, Strong Demand Will

Boost Exports

Red Meat Exports Important to Sector

0

10

20

30

Sh

are

of

Pro

du

cti

on

(p

erc

en

t)

Beef Pork Broilers

* Forecast

2018 2019 2020F2019-20

% Change

Cattle,

$/cwt117.12 116.78 117.0 0.2

Hogs, $/cwt

(live equiv.)45.93 47.95 49.0 2.2

National

Composite

Broiler, $/lb0.978 0.886 0.870 -1.8

Turkey, $/lb 0.802 0.892 1.005 12.7

Livestock & Poultry Prices Mixed

Per Capita Domestic Disappearance Record

High

0

50

100

150

200

250

2017 2018 2019 2020*

Po

un

ds

(reta

il w

eig

ht)

Broiler Beef Pork Turkey Other

226.5 lbs

* Forecast

Situation Facing Livestock and Poultry

Producers

Divergent Feed Prices • Corn: $3.85/bu in 2019/20

$3.60/bu in 2012/21

• Soybean meal: $305/ton in 2019/20

$310/ton in 2020/21

Forage Situation Uncertain• “Other” hay prices in second-half 2019 below 2018

• Dec 1 hay stocks 2 percent higher, but quality is variable

Situation Facing Livestock and Poultry

Producers

• Animal Disease Outbreaks Reshape Global Trade

• Currently reported in Europe, Africa, and Asia

African Swine Fever Reports During 2019

Source: FAO/OIE

Situation Facing Livestock and Poultry

Producers

• African Swine Fever Outbreaks Reshape Global Trade

• Currently reported in Europe, Africa, and Asia

• Level of impact uncertain in China

• Higher prices

• Increased imports

Meat Prices in China Have Risen Sharply

0

10

20

30

40

50

60

70

80

90

1/3

/201

8

2/3

/201

8

3/3

/201

8

4/3

/201

8

5/3

/201

8

6/3

/201

8

7/3

/201

8

8/3

/201

8

9/3

/201

8

10

/3/2

018

11

/3/2

018

12

/3/2

018

1/3

/201

9

2/3

/201

9

3/3

/201

9

4/3

/201

9

5/3

/201

9

6/3

/201

9

7/3

/201

9

8/3

/201

9

9/3

/201

9

10

/3/2

019

11

/3/2

019

12

/3/2

019

1/3

/202

0

2/3

/202

0

3/3

/202

0

Yu

an

/kg

Pork Beef Chicken

14 Percent

Source: China Ministry of Agriculture

China’s Meat Imports Will Increase in 2020

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Pork Beef Chicken*

Milli

on

me

tric

to

ns

Carc

as

s w

eig

ht

2018 2019 2020F

Source: Livestock and Poultry: World

Markets and Trade, January 10, 2020

USDA/FAS

*Excluding paws

Factors Driving the U.S. Forecasts:

• Cattle –Herd Beginning to Contract

• January 1 cattle inventory down 0.4 percent

• Beef cow number down 1 percent

• Heifers for beef cow replacement 2 percent lower

Cattle Herd at 94.4 Million on Jan 1, 2020

Further Decline Likely

80

85

90

95

100

105

Millio

n H

ead

Beef Cow Herd, Calf Crop Declining

0

5

10

15

20

25

30

35

40

45

2003 2005 2007 2009 2011 2013 2015 2017 2019

Beef Cows Dairy Cows Calf Crop*

Mil

lio

n H

ead

* 2020 Calf Crop Forecast

Cattle on Feed Higher, Available for

Placement Lower

15

20

25

30

35

40

45

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Outside Feedlots On-Feed

Mil

lio

n H

ead

-0.4%

2.1%

0.5%

Feeder Calf Prices Will Average Higher

in 2020

130

135

140

145

150

155

160

QI QII QIII QIV

$/c

wt

2010-19 2018 2019 2020*

Factors Driving the Forecasts:

• Hogs – Inventory Continues to Build

• Producers Cautiously Optimistic Despite Recent

Losses

Hog Inventory Increased to 77.3 Million Head

on December 1, 2019

60

62

64

66

68

70

72

74

76

78

80

2011 2013 2015 2017 2019 2021*

Inventory on December 1, Preceding Year

Millio

n H

ead

* Forecast

-30

-20

-10

0

10

20

30

40

50

2015 2016 2017 2018 2019 2020

$ p

er

hea

dAverage Returns to Farrow-Finish Operators

Source: Iowa State University

2019-20 Farrowing Growth May Reflect

Caution

2.5

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

QI QII QIII QIV

2018 2019 2020*

*QI & QII Reported Intentions

QIII & QIV Forecast

Mil

lio

n H

ea

d

1.0%0.4%

0.3% -1.2%

Factors Driving the Forecasts:

• Hogs – Inventory Continues to Build

• Producers Cautiously Optimistic Despite Recent Losses

• Pigs per Litter Continues to Set Records

Pigs per Litter Continues to Grow

8.9

9.1

9.3

9.5

9.7

9.9

10.1

10.3

10.5

10.7

10.9

11.1

11.3

11.5

11.7

2015 2016 2017 2018 2019 2020*

Trend: 2009-13

Trend: 2014.3-2019.4

He

ad

* Forecast

Hog Slaughter Capacity has Increased

Through New Plants

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan

'16

Ap

r

Ju

l

Oc

t

Ja

n '1

7

Ap

r

Ju

l

Oc

t

Ja

n '1

8

Ap

r

Ju

l

Oc

t

Ja

n '1

9

Ap

r

Ju

l

Oc

t

Ja

n '2

0

Ap

r

Ju

l

Oc

t

Millio

n h

ea

d

Weekly Federally Inspected Hog Slaughter

Week Day Slaughter Saturday Slaughter

202,000 head

Average*

488,000 head

Average

454,000 head

Average

212,000 head

Average

131,000 head

Average

451,000 head

Average431,000 head

Average

201,000 head

Average

Factors Driving the Forecasts:

• Hogs – Lots of Hogs on the Way

• Producers Optimistic Despite Recent Losses

• Pigs Per Litter Continue to Set Records

• Trade Becomes Increasingly Important

2020 Pork Exports to Be Record 7.4 Billion

Pounds

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2013 2014 2015 2016 2017 2018 2019 2020F

Billio

n lb

s.

Japan Mexico Canada South Korea China/H.K. Other

24%23%20%

19%18%

20%18%

Percent Share

Other

Factors Driving the Forecasts:

• Broilers – Sector Expanding

• Hatchery Data Points to Continued Expansion

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

2016 2017 2018 2019

19

98

-2000=

1000

Indexed Broiler Returns:Whole Broiler Price Minus Feed Cost

Broiler Returns Weakening

Broiler Laying Flock Grew Most of 2019First of Month

55

56

57

58

59

60

61

Jan Apr Jul Oct

Millio

n b

ird

s

2018 2019 2020

Placements Remain Large

155

160

165

170

175

180

185

190

195

Jan Apr Jul Oct

Mil

lio

n b

ird

s

Placements in Growout Flocks, United States

2018 2019 2020

Factors Driving the Forecasts:

• Broilers – Sector Expanding

• Hatchery Data Points to Continued Expansion

• Bird Weights Continue to Increase

Bird Weight Growth is Above Trend

5.8

5.9

6.0

6.1

6.2

6.3

6.4

6.5

Jan'15

May Sep Jan'16

May Sep Jan'17

May Sep Jan'18

May Sep Jan'19

May Sep

Po

un

ds l

ivew

eig

ht

Proportion of Heavier-Weight Birds Above

Last Year

25.0%

35.0%

45.0%

55.0%

65.0%

75.0%

Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20

Under 6.26 lbs 6.26 lbs and Higher

Perc

en

t sla

ug

hte

red

Factors Driving the Forecasts:

• Turkey – Market is Closer in Balance

• Prices Are Stronger

Prices Increasing with Tighter Supplies

0.50

0.70

0.90

1.10

Jan Apr Jul Oct

Do

llars

per

po

un

d

Frozen Hen Price

2018 2019 2020

-

50.0

100.0

150.0

200.0

250.0

2016 2017 2018 2019

19

98

-2000=

1000

Indexed Turkey Returns:

Frozen Hen Price Minus Feed Cost

Factors Driving the Forecasts:

• Turkey – Market is Closer in Balance

• Prices Are Stronger

• Mixed Signals on Expansion

Sector Caution Returns in Early-2020

22

23

24

25

26

27

28

29

30

31

Jan Mar May July Sept Nov

Millio

n E

gg

s

Eggs in Incubators, First of Month

2018 2019 2020

Turkey Poult Placement Higher

19

20

21

22

23

24

25

26

Jan Mar May July Sept Nov

Mil

lio

n b

ird

s

2018 2019 2020

Factors Driving the Forecasts:

• Eggs – Growth Continues

• Laying Flock Expanding

Egg Laying Flock Growth ContinuesFirst of Month

300

305

310

315

320

325

330

335

340

Jan Mar May July Sept Nov

Mil

lio

n b

ird

s

2018 2019 2020

Egg Production Will Be Record Large

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2014 2016 2018 2020*

Billi

on

do

zen

Table Hatching

*Forecast

Factors Driving the Forecasts:

• Eggs – Growth Continues

• Flock Expanding

• Egg Prices Higher on Demand Strength

Egg Prices Will Average Over $0.99 per

Dozen in 2020

0.00

0.30

0.60

0.90

1.20

1.50

1.80

2.10

Do

lla

rs p

er

do

zen

N.Y. Wholesale Price - Large Eggs

* Forecast

Additional information about the USDA 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

• http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1350

• Foreign Agricultural Service (FAS)Livestock and Poultry: World Markets and Trade

• http://www.fas.usda.gov/data/livestock-and-poultry-world-markets-and-trade