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CME: WASDE Report Forecasts Reduced Beef Production for 2018

13 June 2018

US - USDA’s Office of the Chief Economist released their monthly World Agricultural Supply and Demand Estimates (WASDE) report yesterday, reports Steiner Consulting Group, DLR Division, Inc.

Also, yesterday the monthly Consumer Price Index (CPI) was released. Based on those data, USDA’s Economic Research Service (ERS) calculated their monthly retail meat and poultry prices for May (the data available here).

In the WASDE forecasts for 2018, US beef production was reduced by 0.3 per cent from the prior month’s, and pork was lowered by 0.2 per cent. Underlying the beef change was cattle dressed weight, which has been lower than expected.

Still, 2018’s US beef and pork output are anticipated by USDA to be above a year ago by 3.6 per cent and 4.4 per cent, respectively. For 2019, compared to last months forecasts, WASDE meat and poultry US production numbers were unchanged.

Regarding international meat trade, the only significant WASDE change was increasing US pork export tonnage by 1.3 per cent (up by 75 million pounds). They also raised 2019’s forecast for pork exports by 0.6 per cent (40 million pounds), surging foreign sales to a new all-time high of 6.165 billion pounds. If realized, US pork exports (meat only, not including variety meats) would be 22.3 per cent of production.

It is important to note that USDA forecasts are based on current known domestic and foreign policy and tariffs. So, for example, USDA did not incorporate prospects of retaliation to US intentions to establish additional tariffs on Chinese products.

Data collected by the Bureau of Labor Statistics to calculate the CPI showed that overall meat prices in May were below April’s, but remained above a year ago and were higher than the prior 5-year average. The ERS calculated retail pork price for May was about unchanged from last month’s and a year ago (see graphic below).

In contrast, the calculated Choice beef price declined both month-over-month and year-over-year (see the following graphic). That year-over-year drop was 2.9 per cent or about 19 cents per pound. Besides a Choice retail beef price, the ERS also calculates a All Fresh price, which includes Select grade products and hamburger. The All Fresh price was down 8 cents per pound from April’s but was slightly above a year ago (increase of about 5 cents per pound).

You can view the full monthly World Agricultural Supply and Demand Estimates (WASDE) report by clicking here.


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