USDA forecasts rise in meat supply

A predicted upswing in supply of beef, poultry and pork this year means tougher competition among meat producers, leading to lower prices for consumers, analysts say.

Ranchers are continuing to regrow cattle herds after a drought about six years ago shrunk the industry, according to a U.S. Department of Agriculture report. Export bans on poultry products have meant a flooded U.S. chicken and turkey market, and an influx of pork imports from Canada, along with record-high hog litter rates, also will help increase supply, according to the same report.

Travis Justice, chief economist at the Arkansas Farm Bureau, said this will drag down prices at grocery stores and in restaurants.

“The protein competition will be stiffer as we go through 2016,” he said. “Given our production increases across all the protein products, we are going to expect retail prices to be trending lower.”

One of the poultry industry’s biggest challenges this year will be balancing growing supply with demand, said Tom Super, a spokesman for the National Chicken Council.

“We don’t want to put the pedal to the floor too fast on production in order to get a good balance of supply and demand,” he said.

Super said broiler production is expected to grow a little more modestly in 2016 than in 2015 — around 2-3 percent — as a result of heavier birds and higher slaughter numbers.

“But the demand is certainly there for chicken products, and we think it’s going to stay that way,” he said.

There is also a lot of dark meat in storage left from last year when some countries banned U.S. poultry after the outbreak of bird flu. Cold storage stocks of all broiler meat were up 28 percent as of Nov. 30 compared with a year earlier, according to the USDA report.

Justice said the report was written before the most recent confirmed case of bird flu in a commercial turkey flock in Indiana last week.

“Everyone’s on pins and needles,” he said. “The poultry forecast is a little shaky right now.”

Increased production of beef and pork should also lower prices on poultry, Justice said.

He said the beef industry in Arkansas had some trouble in late 2015 after heavy rains impacted cattle feeding. Flooding and frigid weather in Texas and the southern Plains created a short-term supply crunch in late December.

In Arkansas, ranchers had to deal with water and mud — stress factors for the cattle that could affect weight gain. Justice said the weather could have increased production costs for some cattle in Arkansas, but not enough to put a blip on the long-term recovery of the industry in the state.

“A few areas in the state did experience flooding and cattle losses, but it’s not that noticeable,” he said.

Pork production also is increasing. The September-November rate hit record highs at 10.53 pigs per litter — an increase of 2.9 percent from the same period last year, according to the USDA report.

The report predicts that the litter rates will drive growth in pork production in 2016. Commercial pork production is forecast at almost 25 billion pounds, a 2 percent increase from last year, according to the report.

“We anticipate more imports from Canada as a result of that,” he said. “It’s just a logistics thing.”

The United States Country of Origin Labeling law, repealed in late December, could cause a rush of Canadian pork into the country as it will no longer be required for U.S. meat producers to differentiate between animals raised and slaughtered in the country.

Justice said the U.S. beef trade with Canada could also pick up, but not enough that the American beef industry would notice an increase in supply.

“We’re their best customer, and they’re our best customer,” he said. “It’s just a logistics thing.”