US Beef and Dairy Outlook Report - June 2008

By U.S.D.A, Economic Research Service - This article is an extract from the June 2008: Livestock, Dairy and Poultry Outlook Report.
calendar icon 18 June 2008
clock icon 5 minute read
USDA Economic Research Service

Beef Trade: Beef exports continue to increase from 2007, while beef imports lag from last year, including a 30-percent year-over-year decrease in April. Cattle imports are expected to be 6 percent higher than last year, while live cattle exports could be more than double last year due to increased exports to Mexico.

Dairy: Milk production is forecast to rise only fractionally (about 0.5 percent) in 2009, as higher feed costs are expected to slow growth in milk per cow and as cow numbers decline slightly. A fifth round of dairy herd buyouts was announced under the CWT program, with bids being accepted through June 30, 2008. Stronger-than-expected export sales to date resulted in higher export forecasts for 2008, with reductions expected in 2009.

Beef Trade

Beef Exports Follow Strong First Quarter With Strong April

Beef exports this year are expected to be 1.650 billion pounds, a 15-percent increase from last year. Historically, the second and third quarters are the strongest for exports as the Northern Hemisphere enters the summer. First-quarter exports were already strong; 360 million pounds were exported from the United States, a 34- percent increase from the first quarter in 2007. Exports increased 29 percent yearover- year in April as well. FAS Export Sales Reports show a seasonal increase of beef exports going to Japan. Exports to Canada and Mexico, currently the two largest export markets, are also expected to be higher than last year. Exports are expected to expand still further in 2009. Next year’s exports are anticipated to increase 13 percent to 1.87 billion pounds.

Beef imported into the United States is expected to fall 9 percent in 2008, to 2.755 billion pounds. The latest official trade update showed a 30 percent decrease in April, year-over-year. Domestic cow slaughter forecasts indicate that there will be a good supply of processing meat, some of it the result of increased live slaughter cow imports from Canada. Additionally, the relative weakness of the dollar makes imported beef more expensive. Imports are expected to increase 7 percent in 2009 as cow slaughter numbers decline.

Cattle Imports and Exports Both Expected To Increase from Last Year

This year 2.65-million head of cattle are expected to be imported into the United States. This is a 6-percent increase from last year’s 2.495 million. Imports of Canadian feeders continue to be higher than last year, according to AMS weekly reports. The weekly reports also show that slaughter cows and bulls continue to cross the border at a steady rate, following changes in U.S. regulations that allow cattle over 30 months of age born after the Canadian feed ban to be imported from Canada. Imports from Mexico have been below last year and below 5-year averages, according to both official Census data and AMS weekly reports. Next year’s cattle imports are expected to decrease 6 percent to 2.5 million head as trade should be more representative of normal seasonal patterns.

Live cattle exports from the United States continue to increase. First-quarter 2008 exports were nearly three times higher than last year. Cattle going to Mexico are responsible for most of the increase. This year 125,000 head of cattle are expected to be exported from the United States, a 94-percent increase from 2007. Next year’s exports are expected to be 130,000 head, as current conditions should continue to hold into next year.


Slowing Milk Production and Export Opportunities Generate Mixed Signals

Despite higher feed costs, milk production continues to rise, and the year-over-year increase in 2008 will be about 2 percent. Current-year production is projected to be 189.3 billion pounds. The effect of this year’s soaring feed costs will not be apparent until 2009. Milk production is forecast to rise about 0.5 percent in 2009 to 190.3 billion pounds. The milk cow inventory in 2009 is expected to be about 9,230 million head in 2009, down fractionally from the 2008 forecast of 9,255 million. The expected decline is due partly to another round of dairy herd buyouts under the CWT program. Per cow outputs, which have been increasing at a slower rate for several years, will only increase nearly 1 percent in 2008 to 20,455 pounds and almost 1 percent again in 2009, to 20,625 pounds.

Competition between the U.S. domestic markets and export markets is expected to support relatively strong milk and dairy product prices. Continuing changes in the structure of supply and demand for milk and dairy products in the European Union (EU), reduced product availability from Oceania and other regions, and the lower valued U.S. dollar are still making the United States an increasing supplier to global dairy product markets. Exports in 2009 are expected to drop from 2008 totals as competitors recover international market share. The favorable export situation contributes to domestic commercial use being projected 1.2 percent (m.e., fat basis) above 2007 in 2008 and 2.1 percent higher in 2009.

National Agricultural Statistics Service (NASS) cheese prices will likely average $1.940 to $1.980 per pound in 2008 and decline to an average $1.805 to $1.905 per pound in 2009. Butter prices are forecast to average $1.345 to $1.415 per pound this year and climb to $1.350 to $1.480 in 2009. The nonfat dry milk (NDM) price has fallen in 2008 compared with last year and will likely average $1.360 to $1.400 per pound. However, prices are forecast higher in 2009 to average in the $1.475 to $1.545 per pound range. Whey prices are off sharply from 2007 and by year’s end will average 28.5 to 30.5 cents per pound. A recovery to the range of 32.0 to 35.0 cents per pound is expected in 2009.

The combination of reduced export demand and higher dairy product prices, except for cheese, will push two of the three reported milk prices lower in 2009 following their rise in 2008. The Class III price is expected to average $18.15 to $18.55 per cwt in 2008 and to average $17.10 to $18.10 per cwt in 2009. The Class IV price this year is expected to average $15.55 to $16.05 per cwt and climb to $16.55 to $17.65 per cwt in 2009. The all milk price in 2008 will average $18.90 to $19.30 per cwt—and is expected to fall in 2009 to average $18.15 to $19.15 per cwt.

Further Reading

More information - You can view the full report by clicking here.

June 2008

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.