Outlook for U.S. Beef, Pork, and Poultry Meat in 1999

U.S. beef, pork, and poultry production in 1999 is expected to reach a record 35.5 million tons, up from 35.4 million in 1998.

Prices for cattle are expected to strengthen considerably, while the price outlook for hogs and broilers is mixed. In 1999, total exports of beef, pork, and poultry meat are projected to exceed a record 4.3 million tons, 2 percent higher than in 1998. The latest estimates--released August 12--indicate that beef and pork shipments are expected to rise 3 percent to about 1.6 million tons and poultry meat is expected to increase about 2 percent to nearly 2.8 million tons. Meat export growth in 1999 will be substantially slower than the nearly 10-percent average increase (attributed to strong poultry exports) attained during the last 3 years.

Beef Prices Set to Rise in 1999

U.S. beef production is projected to decline 7 percent to about 10.9 million tons in 1999. Beef output in 1998 is estimated to be 2 percent higher than in 1997 although slighter fewer cattle are expected to be slaughtered this year. Excellent pasture conditions and slow marketings early in 1998 led to placements of heavier cattle this year. The average dressed weight in 1998 is expected to be about 20 pounds heavier than in 1997. Weights are projected to decline in 1999 and fewer cattle will be slaughtered as heifers are retained for herd expansion.

The drop in U.S. beef production in 1999 is expected to have a positive impact on cattle prices next year. On average, the price for Choice Steers (Nebraska Direct 1100-1300 lbs.) is projected to rise about 15 percent to the mid-$70's per cwt. Prices in 1998 are estimated at $63.50/cwt, 4 percent lower than in 1997. A global tightening of cattle inventories in 1999 will lend support to increased U.S. cattle and beef prices. In addition to reduced U.S. beef production, cattle inventories and beef production in Australia, New Zealand, and Canada are expected to decline.

Beef exports are expected to expand 3 percent to 977,000 tons (CWE) in 1999. The economic outlook in Asia will largely determine the direction of beef exports in 1999. January-May 1998 beef exports have been very strong to Japan, but the strengthening U.S. dollar is likely to slowdown shipments during the last half of 1998. Demand in Asia, specifically Japan, is expected to lift beef exports next year. But continued economic weakness in Asia, coupled with higher U.S. beef prices, could evaporate any export gains.

Pork Production Continues to Expand, Prices Remain Low

Pork production is estimated to increase 9 percent to 8.5 million tons (CWE) in 1998 and to again increase 4 percent to about 8.9 million tons in 1999. The sharp increase in production has battered hog prices this year. Hog prices are estimated to be 33 percent lower in 1998 at $34.50/cwt compared with an average of $51.36/cwt in 1997. The continued expansion of U.S. hog inventories, boosted by declining feed grain prices, is projected to keep prices relatively low in 1999; estimated to average only about $1/cwt higher in 1999.

Lower hog and pork prices have substantially led to an improvement in pork exports in 1998. Pork exports in 1998 are forecast 21 percent higher at 572,000 tons (CWE). In 1999, exports are projected to rise 3 percent to 590,000 tons, as continued low prices for U.S. pork are expected to aid exports in 1999.

Poultry Production to Return to Normal Growth Pattern in 1999

The U.S. broiler industry, beset by hot weather which has slowed growth rates in some southern broiler production areas and disease problems that affected the breeding stock, is looking at 1998 production gains of only 2 percent. Projected near record prices, however, and reductions in feed costs resulting in favorable producer profitability will likely lead to a more normal 5 percent production increase in 1999. It is interesting to note that the near-record margins realized by the U.S. broiler industry is occurring in a context of abundant meat supplies in the United States and low pork and beef prices.

A slow down in broiler output expectations in 1998 and a strong export pace has led to an unexpected drop in domestic per capita consumption. This is only the second decline in per capita poultry consumption in the past 17 years with the previous decline in 1995 generated by a 34 percent increase in global demand for U.S. product. In 1998, higher broiler meat prices relative to other meats, is playing a contributing factor in consumer's purchasing patterns.

Industry profitability has, in part, been supported in 1998 by robust shipments of U.S. broiler meat. Strong broiler exports in the first 5 months of 1998 prompted an upward revision to the 1998 forecast to 2.3 million tons, now 9 percent higher than 1997. The export forecast for broiler exports in 1999 was also adjusted upward with shipments to our two major markets--Russia, Hong Kong/China--expected to expand slightly. Turkey exports in 1999, while projected up, are not expected to reach the record level of 1997.

Caveats to the Meat and Poultry Outlook

The export outlook for U.S. meats in 1999 is clouded by the considerable economic uncertainties in our major markets, particularly in Asia and Russia. Prospects for the continued weak Japanese yen could hamper red meat exports while economic turmoil in Russia and any devaluation of the ruble would affect the outlook for U.S. poultry meat. In addition, program decisions such as the availability of GSM-102 for South Korea hold implications for meat exports to that market. Also, U.S. meats compete with each other in the domestic market, and any significant production or consumption changes could weigh on prices.

For more information contact Joel Greene at (202) 720-6553 and Nancy Morgan at (202) 720-1372

Last modified: Tuesday, December 16, 2003