|
New Video's 11/28/2011
|
Livestock numbers expected to decline through 2009By Jennifer Bremer
A trend toward declining livestock numbers is expected in 2009 due to higher feed and input costs, with an increase expected in 2010. "Currently, producers continue to rely on demand and exports to hold the market," said Iowa State University livestock economist John Lawrence. "It has been an interesting year." Total meat production for 2008 has been at record levels but, due to higher feed costs, less livestock is being produced. Lawrence said herd cutbacks have already occurred and are expected to continue through the coming year. Poultry outlook Poultry production continues to decrease, which is favorable for beef and pork prices. The recent passage of Proposition 2 in California, which bans modern housing systems of pregnant pigs, calves raised for veal, and egg-laying hens by 2015, will affect egg production greatly. A shift is expected to states such as Iowa, which already has high egg production. Overall, chicken production is expected to be down 4 to 5 percent from 2008 to 2009 and then up 1 percent again in 2010. Turkey production is expected to be down 3 to 4 percent from 2008 to 2009 and down again 1 percent in 2010. Hog outlook "The hog industry has had a tough go since October 2007 and it looks like they will probably be in the red ink through May 2009," said Lawrence. Exports continue to carry the hog market, with exports up 69 percent from January to August. "August exports were down a bit, but exports continue to be the driving factor for prices," he added. A slow liquidation is underway in the breeding herd, but Lawrence says a cutback in production will be needed to improve prices in the long run. An increase in sow slaughter in the second quarter of 2008 is beginning to show a decrease in production numbers. The implementation of country-of-origin labeling has decreased the number of pigs sent from Canada to the U.S. to be fed out. The increase of hogs sent down to be slaughtered in the U.S. at the beginning half of the year has also decreased considerably. "With a lower supply, pork demand has been better--which has also been affected by less chicken," Lawrence said. "There is only about 1 percent more pork available to U.S. consumers, though, since exports are up so much. "Right now it is so important for pork producers to realize they need to make cutbacks in order to drive the prices higher and get back to a profit level." Cattle outlook "Overall, a weak economy and a strong dollar are bad news for beef demand," said Lawrence. "People are willing to give up some things when money is tight and go out to eat less or buy cheaper protein sources." Herd liquidations continue on the beef side, also. Cowherd costs continue to increase and feedlot losses and cost of gain has pressured calf prices, which has pushed the liquidation. In 2008 an increase of cow slaughter has been seen in both dairy and beef herds--dairy cow slaughter up 3.9 percent and beef cow slaughter up 13.9 percent. Lawrence expects generally lower cattle supplies in 2009, 2010 and likely beyond. "I expect a reduction of supplies in 2011 and 2012, also. I expect a bit of a change because we are on year 14 of the usual ten-year cattle cycle of high supplies, lower prices, decrease in herds and then an increase in prices," he said. The increase of ethanol plants has also led to an increase in feed products available to cattle producers. Lawrence thinks this may cause a shift of cattle feeding back to the northern Midwestern states, as more feed is available. Cattle producers have had many pressures affecting production, including land prices. The cost of pastureland in Iowa has doubled in the past five years as more and more land is being converted to crops. Competition is also seen from yearlings, for the pasture. Risk management Lawrence expects livestock prices to eventually adjust to the higher feed costs, but he doesn't expect it to happen right away and he does expect prices to be low until that evening out occurs. "We are seeing a greater risk for livestock producers than we have in the past," he said. "Producers must know what to do if a market is removed or changed." He stressed the importance of managing margins and not just the sale price. He suggests for livestock producers to have physical control of their corn, use livestock gross margin or livestock revenue protection, as well as working with the futures and options to help protect their investment. "Risk management is not always a simple thing, but it is good for livestock producers to realize there are opportunities available to protect their livestock," he added. "The world in which producers operate has fundamentally changed and now producers have to change their business in order to operate in the best way possible," concluded Lawrence. Jennifer Bremer can be reached by phone at 515-833-2120 or by e-mail at jbremermaj@hotmail.com. 11/24/08 Date: 11/20/08
Copyright/Privacy
Copyright 1995-2011. High Plains Publishers, Inc. All rights reserved. Any republishing of these pages, including electronic reproduction of the editorial archives or classified advertising, is strictly prohibited. If you have questions or comments you can reach us at High Plains Journal 1500 E. Wyatt Earp Blvd., P.O. Box 760, Dodge City, KS 67801 or call 1-800-452-7171. Email: webmaster@hpj.com |
|
