“Large increases in the prices of feed grains and little or no growth in the domestic economy” is driving change in the outlook for broiler production, according to this month’s “Livestock, Dairy, and Poultry Outlook” report from USDA’s Economic Research Service (ERS).  Overall demand for meat products has been down with prices for many broiler products below a year ago.  As a result of these and other negative factors, ERS reduced its forecast for broiler production for 2012 by 230 million pounds.  Next year’s output is now seen at 37.8 billion pounds, up 1.1 percent from 2011.  ERS said that the second half of 2012 will experience most of the reduction in production as the breeder flock continues to be trimmed.

ERS said that expectations are for reduced supplies of feeder cattle for feedlot placement over the next two or three years.  This situation is providing support for current or higher price levels for feeder cattle.  Hedging opportunities exist at futures prices that would provide positive margins for feedlot operations, ERS reported.  Export demand for U.S. beef is increasing with overseas sales surpassing 2003 levels, helped in part by a relatively weak U.S. dollar, ERS added.

ERS reported that the average pigs per litter during the March-May 2011 quarter was 10.03, 2.2- percent higher than the litter rate for the spring quarter a year earlier.  This record level continues the upward trend in evidence for more than two decades.  ERS attributes the ongoing increases in pigs per litter to several factors.  Two primary factors are genetic improvements and large-scale hog operations implementing innovations in technology to improve breeding and survival rates.  ERS indicated the upward trend is most likely to continue into the future.