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Meat Rally Seen on Cattle Supply Drop, Chicken Demand Gain

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Feb. 22 (Bloomberg) -- A drop in cattle supplies and improved poultry and pork demand will boost meat prices this year, according to the U.S. Department of Agriculture.

Beef production will drop 3 percent to 25.1 billion pounds on reduced supplies of slaughter-ready cattle, according to Shayle Shagam, a USDA livestock economist. The domestic cattle herd shrank for a sixth straight year in 2012, and the beef-cow herd on Jan. 1 was the lowest since 1962. U.S. beef imports will rise 16 percent, he said. The average steer price will rise to $1.295 a pound in 2013 from a record $1.2286 last year.

“The estimated retail-beef price will rise slightly above the record $5.02 a pound in 2012,” Shagam said today at the agency’s annual agricultural forum in Arlington, Virginia. “Improved economic growth and reduced U.S. cow slaughter will support increased imports” of hamburger meat, he said.

The worst drought since the 1930s damaged grain crops and pastures, boosting feed costs and forcing ranchers to shrink herds. Since Chicago cattle futures reached a record in January, price are down 4.9 percent. Drought conditions continue in the southern and western Great Plains, which will stress forage crops including alfalfa this year, reducing supplies and potentially diverting some corn to silage, Robin Newell, the chairman of the St. Paul, Minnesota-based National Alfalfa & Forage Alliance, said today at the forum.

Chicken Outlook

Chicken production will rise 0.7 percent to 37.3 billion pounds, Shagam said. The breeding flock in December was larger than a year earlier for the first time in 23 months, and the number of chickens hatched in the October-to-December period exceeded the year-earlier amount for the first time since the first quarter of 2011, Shagam said. Broiler prices will average a record 95 cents a pound, up from 87 cents last year.

“Despite higher production, tight supplies of beef and improving economic conditions are likely to support strong demand for broiler meat,” Shagam said. “Increased demand for chicken meat is likely to manifest in record retail prices.”

Commercial pork production will rise 0.7 percent to 23.4 billion pounds, with hog slaughter increasing 1 percent, Shagam said. Pork exports may reach 5.46 billion pounds, up from a record 5.38 billion in 2012. Hog prices will average 63 cents a pound in 2013, up from 60.88 cents in 2012, he said.

“Higher forecast beef and broiler prices and increased exports may provide support for the hog sector, if consumers view pork as price competitive,” Shagam said.

Turkey production will increase about 1 percent to 6.03 billion pounds after a 3.1 percent increase in 2012, Shagam said. The national turkey-hen price will average $1.035 a pound in 2013, down from $1.06 in 2012.

Exports for 2013 will rise about 4 percent to 830 million pounds as weaker turkey prices and stronger broiler prices provide increased export opportunities, Shagam said.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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