Market Outlook

Livestock, Dairy, and Poultry Outlook, December 2017 (summary)

First-Half 2018 Forecasts for Red Meat, Poultry, Eggs, and Milk Show Mostly Year-Over-Year Production Increases with Lower Prices

With the exception of lamb and eggs, larger year-over-year product supplies are accompanied by lower prices. For cattle, higher second-half 2017 cattle placements are expected to lead to higher first-half 2018 fed cattle marketings and seasonally higher (+5.1 percent) beef production. First-half 2018 cattle prices are expected to be 7. 3 percent below prices in the first-half of 2017. Higher first-half 2018 pork production (+4.3 percent) derives mostly from expected higher second-half 2017 pig crops. Consequently, hog prices are expected to fall 2.4 percent below those in the first half of 2017. For broilers, expected higher producer returns drive relatively small production increases. First-half broiler prices are forecast to decline by 6.8 percent. For turkeys, a modest recovery in domestic demand and exports drives small increases in production (+0.24 percent), but low prices continue to underscore the slow pace of demand recovery relative to supply levels. First-half 2018 turkey prices are expected to fall by 9.8 percent. Milk production in the first half of 2018 is forecast to increase over the first half of 2017 by 1.6 percent. Although milk prices are expected to decline from 2017 to 2018, relatively low feed prices are expected to encourage expansion of the milk cow herd and greater yield per cow, although at a slower rate than forecast last month.  For eggs, expected first-half 2018 price increases (+17.7 percent) reflect the year-earlier low prices that prevailed due to record-level supplies. Production growth (+0.9 percent) in the first half of 2018 is expected to be moderate as producers continue to recover from margins that were relatively low until recently.

Cattle/Beef: Cattle on feed inventories remain above year-earlier levels and placements continue to reflect the larger cattle inventory. However, the pace of beef cow and heifer slaughter suggests that the rate of expansion may have slowed during 2017. Prices across the cattle complex appear to have peaked and are under pressure during the fourth quarter. Higher beef exports in each month in 2017 through October resulted in year-to-date export growth of 14.3 percent above the previous year. Beef export forecasts for 2017 and 2018 have been revised upward from the previous-month forecasts based on the current pace of growth and strong global demand. 

See the December LDP Outlook report and previous reports.