Cow slaughter is also expected to decline from 2012 as producers retain cows and the breeding herd liquidation moderates. However, poor returns in the dairy sector will result in dairy cow slaughter remaining relatively high and partly offsetting the decline in beef cow slaughter.

Total commercial cattle slaughter during 2013 is expected to decline almost 4 percent. The decline in slaughter will be partly offset by increased carcass weights.

Carcass weights are forecast to increase to almost 791 pounds due to a combination of mild winter weather so far this year and increased adoption of beta-agonists which improve feed efficiency.

Beef exports for 2013 are forecast at 2.45 billion pounds down from 2.46 billion pounds in 2012. In 2012, exports declined almost 12 percent from 2011’s record as U.S. prices rose and due to the relative strength in the dollar, a greater proportion of the increase in prices was passed on to foreign buyers. Sales declined to most major markets with the exception of China and Hong Kong.

Although economic growth in most markets for U.S. beef should support demand in 2013, economic growth and tight supplies of beef in the U.S. will limit exports.

In addition, the dollar is expected to decline only modestly, implying that any forecast increases in U.S. beef prices will be more fully transmitted to foreign buyers. Russia has banned imports of beef which is not certified as Ractopamine-free, but with tight U.S. beef supplies available for export, it is expected that product will shift to other markets.

U.S. beef imports are forecast at 2.57 billion pounds for 2013, up about 16 percent from 2012. This follows an 8 percent increase in imports in 2012. Improved economic growth and reduced U.S. cow slaughter will support increased imports.

However, continued strong global demand and the relative weakness in the value of the U.S. dollar may constrain growth in imports.

The 5-Area steer price for 2012 is forecast to average $125 to $134 per cwt, up from 2012’s record average of $122.86. As fed cattle supplies shrink in 2013, prices are expected to continue to climb, but both packers and feedlot operators are facing poor-to-negative margins which will limit flexibility in price negotiations.

Feedlot returns are negative and operators will continue to face increasing feeder cattle prices as feeder calf supplies shrink and relatively high feed costs until the next crop is harvested.

Packers, on the other hand, may be limited in what they can pay given the downstream effects of potential resistance to high beef prices and competition from other meats. Although tighter supplies will likely pressure retail prices, increases may be limited compared to the past several years. Retail choice beef prices for 2013 are expected to average slightly above last year’s record $5.02 per pound.

Hogs and pork

Despite relatively high feed prices and recent negative returns, producers are expected to expand production in 2013. Producer returns were negative for most of the later part of 2012 and returns in 2013 will reflect the relatively high feed costs for much of 2013.

Over the past year, producers have kept the number of sows farrowing little changed, while increasing pig crops though gains in pigs per litter.

The December 2012 Quarterly Hogs and Pigs report estimated that on December 1, 2012 the inventory of all hogs and pigs was 66.3 million head, virtually unchanged from a year earlier.