Consumers continue to benefit from excess meat supply as production is up and exports are soft. During the first four months of 2006, red meat production was up 3.3 percent from a year ago. Turkey head slaughtered surged 5 percent and young chicken by 2.4 percent. Of course, poultry ready-to-cook pounds increase every year, so add 1 percent to 3 percent more to these percentages. Maybe consumers have to pay more for energy, but they benefit nicely from inexpensive meat.
I do not see less meat occurring until the fourth quarter, as the industries are geared up to produce more. Second quarter combined per capita supply could be up 3.3 percent and third quarter by 3.1 percent but with a different meat combination. Expect to see extra beef and broiler meat in the second quarter, while poultry and pork supplies will likely see an increase in the July-September period. By October-December, year-to-year comparisons reflect a huge 1.6 percent per capita supply in 2005 versus 2004. Thus, in 2006, a moderate increase is expected. A rebound in exports of beef and poultry could easily cause these domestic supply numbers to change considerably.
Cattle on feed on April 1 exceeded a year ago by 9 percent and two years ago by 10 percent. This could be the highest placement numbers for the year. Pork producers are showing moderate restraint even if their exports are setting records. Young chicken producers’ weekly egg sets are beginning to show small declines from last year’s huge numbers as they realize exports could remain down for a while. In fact, in the first quarter, the nation’s broiler breeder flock in relation to cumulated placements was the smallest percentage since 1999. But hatchability since last October has been down from the prior year. Makes one wonder, as you would expect improved productivity with a younger flock. Also the nation’s breeder flock is about 2 percent smaller than a year ago, according to USDA.
Feed ingredient values will remain variable into the summer growing period. Huge U.S. supplies of coarse grain and soybeans should mean no sizable increase in prices. Actually, a good growing period could push them lower during the third quarter. Better indication of disappearance will be known on June 30th when the grain stocks in all positions are released by USDA. Corn usage will be strong domestically, while exports through end of April were up 10 percent. Soybean and wheat exports were down 21 percent and 5 percent, respectively, from a year ago as the world supply exceeds the prior year on those grains.
Our June-November projection for corn prices is $2.10 versus $1.92 in the same period last year. Our estimate for soybean meal prices June-November is $180 per ton versus $188 per ton in the same period last year.