The U.S. agriculture community is oftentimes at the mercy of external factors, whether it is a natural phenomenon like blizzards or floods or man-made issues like trade disputes. While it’s impossible to predict those types of factors that could affect the industry, initial estimates for the meat and poultry industry indicate a strong year, with increased meat supplies for processors.
Globally, the African Swine Fever outbreak in China was one of the biggest ag news stories of 2019. That outbreak greatly affected global protein production last year and will do the same in 2020, reports Rabobank. Poultry and aquaculture are the animal proteins most likely to lead production growth worldwide, with beef production stable. Pork production worldwide will be in a steep decline due to China’s ongoing problems.
In North America, though, the picture is much rosier for the pork industry.
“We expect production for all species to rise in 2020 – led by pork, followed by poultry, and finally beef. While domestic consumption will grow, exports will need to pick up to manage this production growth,” the bank stated in its agribusiness report.
Pork production in 2020 is expected by Rabobank to rise 3.2% YOY (year over year), driven by modest growth in the breeding herd and improvement in productivity. Pork export demand will remain robust, due to expected increasing shipments following the implementation of the trade agreements with China and Japan. However, labor shortages remain a key constraint in 2020, as increases in hog supplies continue to outpace packer capacity – an issue that faster packing line speeds could help to mitigate.
The National Agricultural Statistics Service (NASS) Cattle on Feed report for December estimated 2.1 million head of cattle were placed in feedlots in November 2019. This was larger than expected and will likely generate greater expected cattle marketings and beef production in second-quarter 2020. However, because those calves were likely placed in feedlots rather than remaining on winter wheat pastures as expected, the placement forecast for first-half 2020 was reduced. As a result, fewer fed cattle marketings are anticipated in second-half 2020, contributing to less expected beef production during that time. The forecast for 2020 beef production was lowered by 75 million pounds from last month to 27.4 billion pounds.
Randy Blach, CEO of CattleFax, spoke about the beef industry at the 2019 Certified Angus Beef conference in Asheville, N.C. He pointed out that not only has the U.S. cattle herd rebounded from the drought in the early 2010s, but the quality of the beef being produced is greatly improved. In the span of about 15 years, the industry has gone from grading 55 percent of cattle at choice and prime to 80 percent.
“This has been an incredible transformation in a short period of time because of that genetic interval that we have to go through in the industry. This is not a six-week turnaround like it is in the poultry industry,” he added.
Rabobank expects the U.S. poultry to have a stronger year in 2020 than in 2019, citing tightening in U.S. beef supplies and U.S. access to the Chinese market.
“The continued ramp-up of operations at recently completed facilities is expected to drive nearly 3% growth in [the first half of] 2020,” the bank noted in a report, while a new plant coming online should contribute to 1.5% growth in the second half. IP