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AGRIBANK RELEASES INSIGHTS REPORT ON LIVESTOCK AND DAIRY SECTORS
Source: AgriBank news release

Livestock and dairy margins continue to adjust downward from their record levels set in late 2014, as production increases and export demand declines due to the increasing value of the U.S. dollar, according to a new report issued by AgriBank, the St. Paul-based Farm Credit Bank. After declining $26.5 billion in 2015, the USDA projects that total U.S. livestock and product receipts will decline another $9.6 billion (-2.5 percent) in 2016.

The report provides an overview of the livestock and dairy sectors across the 15-state AgriBank District and nationally.

Highlights

TURKEYS ARE THE EXCEPTION. Receipts are projected to be down in 2016 for all of the major categories with the exception of turkeys, where the rebuilding of flock numbers and prices remaining near historic highs are expected to grow cash receipts by $300 million (+5.3 percent).

EGGS: THE BIGGEST LOSER. The largest percentage loser is projected to be eggs (-16.1 percent), as the industry comes off record growth in 2015 due to the shortage caused by bird flu and record high prices.

MANY FACTORS AT PLAY IN 2016. Major themes affecting the livestock and dairy sector in 2016 include domestic production cycles and price response, the U.S. dollar, disease potential and consumer behavior.

"After a strong finish to 2014 with record profit margins for many livestock and dairy producers across the board, 2015 was, for the most part, a transition year to the reality of lower margins," said Jeff Swanhorst, AgriBank executive vice president of credit and chief credit officer. "In 2016, the dominant themes will be the impact of several major categories entering or continuing their expansion phases of the production cycle, the increasing dollar's negative impact on exports, the potential for additional disease events and their disruption of supplies and exports, and domestic consumer behavior with respect to saving and consumption. Additionally, the continuing theme of the reorientation of the global developing economies to a slower future growth path will also have an influence on the U.S. livestock and dairy sectors."

AgriBank Farm Credit Bank provides financial solutions to meet the needs of production agriculture in America's heartland. We feature our research and analysis in AgriBank Insights-winner of a national Best of NAMA first-place award in 2016-as part of our AgriThought initiative to help inform the financial decisions among those we serve.


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