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WASDE - Livestock

Jul 11, 2012

LIVESTOCK, POULTRY, AND DAIRY: The forecasts for 2012 and 2013 red meat and poultry

production are reduced from last month as higher feed prices are expected to slow the pace of

pork and poultry expansion and temper growth in weights. Beef production is forecast higher for

2012 as deteriorating pasture conditions are expected to increase placements in feedlots.

USDA’s Cattle report, to be released on July 20 will provide an indication of the 2012 calf crop

and producers’ intentions regarding heifer retention. Beef production is reduced slightly for 2013

as the earlier placement of calves in 2012 results in a small adjustment to early 2013 marketings.

Cattle carcass weights are raised for the first part of 2012, but placement of lighter-weight cattle

in feedlots and the higher forecast cost of feed are expected to dampen weight growth in 2012

and 2013. Egg production is raised slightly for 2012 as higher prices support slightly faster

growth, but the forecast for 2013 is reduced as higher feed prices pressure producer returns.

Beef imports are raised for 2012 as demand for processing beef remains strong and a

strengthening of the U.S. dollar has helped support imports from Oceania. Beef exports are

reduced from last month as exports have slowed. Strong pork exports in April support an

increase in the 2012 forecast. Pork imports are unchanged. Broiler and turkey exports for 2012

are raised based on current export demand. Beef, pork, and turkey trade forecasts for 2013 are

unchanged from last month but the forecast of broiler exports is raised on expectations of

continued strong demand.

Cattle, broiler, and turkey price forecasts 2012 are lowered from last month, but hog prices are

raised. Egg prices are raised as current prices have been stronger than expected and supplies

are expected to be tighter in the later part of the year. For 2013, the cattle price is unchanged,

but hog, broiler, and turkey prices are raised from last month on tighter supplies. The egg price

forecast is raised as the production forecast is reduced.

WASDE-508-5

The milk production forecasts for 2012 and 2013 are reduced from last month as higher forecast

feed prices are expected to pressure producer returns and encourage a more rapid decline in the

cow herd. Milk per cow is also reduced due to higher forecast feed prices this year and next. In

addition, milk yields in the short term may be affected by recent high temperatures. Imports are

raised on a fat basis, reflecting stronger imports of cheese. Exports are raised on stronger sales

of cheese, whey, and nonfat dry milk (NDM).

Cheese prices are forecast higher for 2012 and into early 2013 as stronger exports support

prices. Butter prices are forecast higher in 2012 but weaker domestic demand is expected to

offset lower production in 2013 and the price forecast is unchanged. Weaker expected domestic

demand will also limit price movements for NDM and whey. The NDM price is reduced slightly

from last month, but the forecast for 2013 is unchanged. The whey price forecasts for both 2012

and 2013 are unchanged from last month. The Class III price forecasts for 2012 and 2013 are

raised from last month due to the higher forecast cheese price and the Class IV price for 2012 is

raised on the higher butter price. The 2012 all milk price is forecast at $17.05 to $17.35 per cwt

and the all milk price for 2013 is raised to $17.35 to $18.35 per cwt.

DISCLAIMER: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation by Commodity & Derivative Adv. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Read Entire Disclaimer.

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