2018 was a banner year for the animal agriculture industry. It was determined that overall demand in the market had produced a 2% growth rate, reaching an astounding 102.4 billion pounds of meat produced. But where will 2019 take us? Can we expect that same level of growth or will the industry taper off? What will happen with prices for stock and how will that impact the money farmers have available to spend on feed to keep their operation producing effectively? Here's a solid look at industry projections from the USDA, Poultry Prospective and Purdue University.
What to expect
Current USDA projections expect the 2% rate of growth to continue this year. Unlike 2018, where only broiler prices rose in the early part of the year while the rest of the industry remained low, it's expected that beef and turkey prices will rise this year, while hog and broiler prices fall further. The increases are based on an increased export market, while trade tariffs will keep pork prices low. Following the German pork dioxin scare a few years back, the market in Europe will continue recovering at a slow rate.
Based on the USDA cattle report, though the government shutdown forced the agency to rely on numbers from July 2018 for their projections, it's expected that cattle production will rise by 3%, while exports of beef are anticipated to rise by 2%, slowing from last year's massive 11% rise. However, if drought and flooding continue in Australia, that figure may go higher. However, Purdue University's Michael Langemeier has prepared an in-depth report studying trends in feed prices, and is anticipating losses of $25 per head for the first two quarters of 2019, losses higher than $25 per head for the third quarter of the year, and the best opportunity for break even prices in the last quarter of the year. Global beef production is forecasted to continue steady growth through 2023.
Pigs and Poultry
Pork production is anticipated to reach record highs this year, as producers continue to expand herds despite less than stellar market prices. However, the export market remains very strong despite trade tariffs that are in place, with exports projected to grow by 6% again this year. This may help some producers overcome the issues faced with lower demand in the domestic market.
Using figures from December, it's anticipated that broiler production will grow by 1% this year, but will not see further flock expansions due to the weak profit margins in that sector. Prices are anticipated to average between $0.94 and $1.00 per pound, as compared to 2018's average of $0.98 per pound. Turkey hen prices are expected to rise from their decrease in 2018, going up from 2018's $0.80 per pound to $0.83 to $0.88 per pound. With laying flocks up by 3% over 2018, it's anticipated that egg prices will drop from an average of $1.38 per dozen in 2018 to $1.22 to $1.29 in 2019. European poultry production is also expected to continue rising, albeit at a slower rate of growth than in the past due to market saturation in Poland, the leading poultry-producing country in the EU.
Come prepared
What can we anticipate for feedstocks as a whole? Dr. Paul Aho, a poultry industry economist, took a solid look at the issue in a recent talk at the 2019 International Production & Processing Expo. He mentioned China's commitment to adding 10% ethanol in its gasoline, which will drive commodity prices up, including corn and soybeans.
2019 shows great opportunities for growth, but recurring low prices in some areas of livestock production may make things difficult for producers. This creates a great opportunity for feed businesses who are able to economize their operations to capture that portion of the market, retaining it through good customer service when prices begin to rise again. But can your current feed software handle the rigors of this market segment? Adifo Software can help you improve your operation's economy, efficiency and quality. Please feel free to contact us today for additional information on how our cutting-edge software can boost your feed business.