While smaller breeding animal inventories and lower farrowing intentions often translate into lower pig crops, continued gains in sow productivity are expected to largely offset lower farrowing numbers in 2011.

Although hog weights are expected to average above last year, higher feed costs may limit gains later in the year. Nevertheless, average dressed weights will be slightly ahead of last year’s average, helping to push pork production ahead of last year’s level.

Hog prices are forecast to average $58-$61 per cwt. in 2011, up from $55 in 2010 and $41 in 2009.

Broiler production to post modest increase in 2011.

The outlook for growth in broiler meat production for the beginning of 2011 has changed considerably over the last several weeks, due to sharp changes in both the weekly number of broiler eggs placed in incubators and the number of chicks being placed for growout.

At the end of November, the number of chicks being placed for growout was averaging 5.5 percent higher than the previous year. By the first week of January, the average number of chicks placed for growout was only 0.8 percent higher than in the same period the previous year. This abrupt slowdown is likely the result of sharp increases in feed prices, especially coming at a time when wholesale prices for many broiler products have been declining.

Reflecting this slowdown, broiler production is projected to increase by about 1 percent in 2011 following a 4 percent increase in 2010. The price of broilers is forecast to range from 80-85 cents per pound in 2011, compared with 83 cents in 2010 and 78 cents in 2009.

Milk prices to move higher.

Milk production is estimated to increase by 1.8 percent in 2011 to 196.1 billion pounds. While feed costs are up considerably in recent months, a decline in cow numbers may not occur until later this year because of the large number of replacement heifers available. Milk per cow is forecast to increase again this year but at less than the pace for 2010. The gain in output per cow last year was due to good weather in addition to moderate feed prices.

In recent weeks, both the domestic and international markets for dairy products have tightened considerably leading to a sharp increase in wholesale dairy product prices and futures prices for milk. Milk output has been affected by cold weather in the U.S. and Europe and heavy rains in Australia. Since early January, the wholesale prices of cheddar cheese, butter and nonfat dry milk have increased by 25-50 percent.

The all-milk price is forecast to average $17.70-$18.40 per cwt. this year, compared with $16.29 in 2010 and $12.93 in 2009. While milk prices are forecast to be higher in 2011, increasing feed costs could continue to put financial pressure on dairy producers, especially those producers that purchase feed at current price levels.

Food Prices to Rise

After two years of relatively low inflation, higher prices for crops and livestock will again pressure food prices. In 2010, the Consumer Price Index (CPI) for all food increased by 0.8 percent, the lowest annual food inflation rate since 1962. The CPI for food-at-home (grocery store) prices increased 0.3 percent, while food-away-from-home (restaurant) prices increased by 1.3 percent. Higher commodity and energy prices are expected to lead to a stronger increase in retail food prices in 2011.