Market Outlook

Livestock, Dairy, and Poultry Outlook, October 2019 (summary)

Small Year-Over-Year Fourth-Quarter Ending Stocks Changes for Beef, Pork, and Broilers; Larger Adjustments for Turkey

Large, noticeable changes in year-to-year stocks behavior in the red meat and poultry industry often suggest that an industry is adjusting to industry-specific supply and/or demand imbalances. Each bar in the figure below represents fourth-quarter ending stocks expressed in terms of weeks of average production in the fourth quarter of 2018 (blue bars), and the forecast for fourth quarter of 2019 (green bars). For beef in 2018, fourth-quarter ending stocks were the equivalent of 1.25 weeks of the average fourth-quarter weekly commercial production. In 2019, beef ending stocks will likely increase slightly, to the equivalent of 1.29 weeks of average fourth-quarter beef production. Based on production and stocks forecasts, broilers are expected to register a small year-to-year change, similar to beef. For the pork industry, fourth-quarter ending stocks in 2019 are expected to be the equivalent of just over 1 week of average production, the same as last year. For turkey, fourth-quarter ending stocks this year are expected to decline to the equivalent of 2.3 weeks of production, down from 2.6 weeks in 2018. In recent years, the U.S. turkey industry has struggled with low profitability and high stocks. The year-over-year decline in weeks of average-production-equivalent stocks suggests that the turkey industry may be returning to ending stocks that average about 2 weeks of production, similar to the period 2013-2015.

Dairy: The milk production forecast for 2019 has been raised due to higher expected cow numbers and milk per cow. With higher yield per cow expected to carry into next year, the milk production forecast for 2020 has also been raised. With additional tariffs to be assessed on imports of some products from the European Union, import forecasts for 2020 have been lowered on both the milk-fat and skim-solids milk-equivalent bases. Export forecasts for 2020 have been lowered on a milk-fat basis but raised on a skim-solids basis. The all-milk price forecast for 2019 is $18.40 per hundredweight (cwt), 5 cents higher than last month’s forecast. For 2020, the all-milk price forecast is $18.85 per cwt, unchanged from last month.

See the October LDP Outlook report and previous reports.