The USDA released it World Agricultural Supply and Demand Estimates (WASDE) report last week, which included a drop in estimated beef production and per capita beef consumption.
Production estimates were lowered by 0.5 percent, with consumption down 0.4 percent.
“It is interesting to note the steady downward revisions in beef production and per capita consumption numbers for this year,” economist Len Steiner and associates wrote in the Daily Livestock Report Oct. 12. “Beef prices have held up better than many expected. In part this is due to robust beef demand, but also because the supply available in domestic channels has not been as large as previously thought.”
The USDA estimates per capita consumption at 57.2 pounds, just slightly higher than a year ago.
Fed steer prices are expected to average $116 per hundredweight for 2018, about 4 percent less than a year ago.
“Building inventories of cattle on feed imply more cattle available for marketing next year, causing USDA to revise up its supply estimates for next year,” Steiner and associates said. “USDA now forecasts beef production for next year at 27.973 billion pounds, 190 million pounds or 0.7 percent higher than the September estimate.”
Per capita consumption of beef in 2019 is expected to increase by 2.8 percent.
“Despite the higher per capita consumption number, cattle prices are expected to be modestly higher if we use the midpoint of the forecast range,” Steiner and associates said. “Futures as of this writing imply an average $117 steer price for next year.”
On the pork side, the USDA revised its estimated per capita consumption, lowering it by just less than a pound.
“Pork production next year is forecast up 5.2 percent and per capita consumption up 4.5 percent,” Steiner and associates said. “Futures currently hold a significant premium for next year. The midpoint USDA hog price for next year is around $56/cwt. compared to $71.5/cwt. futures are currently trading.”
“Clearly the market thinks production may not be as big as USDA thinks, and ASF (African swine fever) should bolster trade.”