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CME: Red Meat, Poultry Production Up

18 December 2012

US - Meat protein supplies are currently hovering above year ago levels, write Steve Meyer and Len Steiner.

Combined red meat and poultry production for the week ending December 17 was 1.778 billion pounds, 21.2 million pounds or 1.2 per cent above year ago levels.

The increase in pounds has come even as producers see fewer numbers of cattle and hogs coming to market. For the latest reported week, USDA noted that compared to a year ago cattle slaughter was 0.632 mil head, down 1.86 per cent; hog slaughter was 2.304 mil head, down 1.93 per cent; broiler slaughter was 152.2 mil head, up just 0.80 per cent and turkey slaughter at 4.610 mil head, was up only 0.07 per cent. So far, producers have been able to offset the decline in slaughter by increasing carcass weights. The average cattle carcass weight (this includes steers, heifers and cows) is currently running at 797 pounds, about 24 pounds or 3.1 per cent above year ago levels. As a result, beef production is up 1.3 per cent even as slaughter levels decline.

That is one big reason why price increases for a number of cuts continue to hover at or below year ago levels, helping contain price inflation and depressing overall cutout values. Hog weights have been well below year ago levels since August, largely because producers pulled hogs forward in an effort to limit the supply of pork coming to market. The strategy worked and it helped contain losses as record corn prices turned pork production systems upside down. It appears that producers may be returning to a more regular production schedule, as evidenced by the steady gains in hog carcass weights and hog slaughter that is running below year ago levels.

While USDA pegs the weekly hog carcass weight at around 206 pounds, the MPR data indicates that weights are actually closer to 207 pounds, about the same as a year ago. Finally, broiler weights continue to run well above last year, with the average live weight pegged at 5.94 pounds, up 2.6 per cent from last year, and helping push total broiler production up 4 per cent compared to a year ago.

The increase in weights reflects efforts on the part of producers to improve productivity and lower marginal costs. The use of feed ingredients, such as ractopamine, has greatly contributed to such improvements. According to the literature, cattle fed Optaflexx (active ingredient Ractopamine Hydrochloride) show live weight gains of 10-21 pounds and improved feed efficiency of 14- 21 per cent. This last point is critical, as improved feed efficiency means that more of the feed that goes into an animal is converted into muscle, lowering the overall cost of bringing those cattle to market. The gains for pigs are also as impressive.

According to the literature, Paylean (ractopamine) fed to pigs at “18 grams per ton improved feed efficiency by 13 per cent, increased average daily gain by 10 per cent, reduced average daily intake by 6 per cent and increased lean gain by 25-37 per cent.”

The bottom line is that producers in a free market system respond to incentives. The producer today is told to produce more meat so as to feed a growing population (+1 billion people in the past decade); she also needs to produce more meat with fewer animals so as to limit the impact on the environment; and the extra meat protein should come from using less feed, as part of that feed is now needed to drive our cars; and the producer is also told to provide meat that is leaner, so as to limit the amount of fat in our diets. Given such lofty goals, producers need to use the best science that money can buy so as to meet society’s requirements. They have done a pretty darn good job at that.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

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