Meat and poultry production in the United States is growing at its fastest pace in four decades and expected to hit a record 95 billion pounds this year.
But the warm front of rising output is running up against a cold front of a stronger U.S. dollar that is cutting demand from abroad, making for a stormy outlook, according to a report Wednesday from CoBank’s Knowledge Exchange Division.
“This abundance of supply will be reflected in an erosion of meat prices over the next two years,” said CoBank economist Trevor Amen, the report’s author.
For consumers who have toyed with turning vegetarian after pricing steaks and roasts the past couple years, any price relief won’t come soon enough.
But producers who don’t adjust in time could find themselves exposed in a market that can’t seem to find its balance.
Supply of pork and broilers, measured on a per-capita basis, are expected to grow by 6 percent each this year, while per-capita beef supplies will stay flat.
The three protein sources, which account for 92 percent of U.S. meat consumption, are rising 4 percent on a combined per-capita basis, the biggest annual gain since 1976.
Growth in pork and poultry supplies are expected to level off soon, but the rebuilding of cattle herds now underway points to a big surge in beef supplies by 2017.
Price drops may be most noticeable at first with poultry. The bird flu outbreak has ravaged egg production but, so far, not broiler production.
Even so, countries that accounted for about a fifth of U.S. poultry exports last year have imposed trade bans, leaving more supply available domestically.
Consumers also substituted pork and poultry when beef became a lot more expensive. As beef prices fall, more consumers may switch back to red meat, accelerating price declines for pork and chicken.
Amen urged meat producers to stay disciplined as they grow supply and to focus on boosting sales abroad.
They need to keep a close eye on the strength of the U.S. dollar, which currently is boosting agricultural imports and discouraging exports.
Denver-based CoBank is a $107 billion cooperative bank with deep ties to the nation’s agricultural sector.
Its Knowledge Exchange Division represents the bank’s attempt to highlight risks and opportunities for its members.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or twitter.com/aldosvaldi
