Meat Outlook More Challenging in 2006

Larger supplies, demand uncertainties and lower prices characterize 2006 pork prospects.

Published on: Feb 20, 2006

Last year was a good year for livestock producers. Returns continued to be favorable. Red meat and poultry production were record high. Pork set output records.

Participants at last week's USDA Outlook Forum learned this year could be more challenging. Total red meat and poultry supplies will rise 3%. While the economy remains strong, concerns exist that higher energy prices and rising interest rates could cut consumer spending on meat. A strengthening dollar, and still relatively high meat prices, could affect export growth.

Larger supplies, demand uncertainties and lower prices characterize 2006 pork prospects. USDA projects commercial pork production at a record 21.2 billion pounds, more than 2.5% larger than 2005's record output of 20.7 billion pounds.

Last fall's outbreak of foot-and-mouth disease in Brazil is restricting Brazil's pork exports thus expanding U.S. export opportunities particularly to Russia where Brazil had been supplying more than 60% of total Russian pork imports.

Still, USDA pegs pork exports up only 4% in 2006 compared to a 21% rise last year. That means U.S. consumers will have to eat a larger share of the rise in pork output. Price incentives to entice them to buy it will likely result in this year's 51% to 52% national base price averaging $42 to $45, compared to $50.05 last year.