USDA Lowers Beef Forecast, Raises 2027 Milk Production Forecast; Markets React to China News

USDA released its latest forecast for beef, pork and milk production and we cover that in depth. Commodity markets showed signs of life after China told the U.S. they were going to by billions of dollars of ag products over the next three years. We wrap up with Walmart and Amazon placing emphasis on rural America. 

Transcript

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Update on business news cross tech and financial markets. We got three news stories queued up today, actually, probably more like two. Um, today is Tuesday, May 19th. Focus on the latest USDA forecast across commodities. So let's get to it. 2026 beef production forecast is lowered 243 million pounds from last month to 25.547 billion pounds on a slower expected cattle slaughter pace. When have we heard that before? In 2027, production is forecast to decline by 0.9% to 25.310 billion pounds. From last month, 2026 cattle prices are raised on recent price data, and next year's prices are projected to reach new highs as supplies remain limited. Beef imports in 2026 are forecast higher than last month, while in 2027 imports are forecast to decline 1.8% year over year. Beef exports in 2026 are updated with first quarter data, but unchanged in the outlying quarters. In 2027, exports are forecast to decline 1.1% year over year following the beat the 2027 beef production forecast. Switching over to dairy, the 2026 dairy cow herd is projected to average 9.62 million head, which is 10,000 the head more than last month. The dairy herd is expected to hold steady at that number in 2027, while higher projected milk yield per cow is expected to increase production to 236 billion pounds, which is 0.6 billion more than in 2026. Export forecasts are adjusted higher in 2026 on both milk equivalent basis due to stronger expected cheese and dry whey exports, more than offsetting lower expected exports of dry skim milk products. Exports are expected to remain strong in 2027. Domestic use is forecast higher than 26 on strong expected domestic demand. Higher milk production is expected to contribute to a lower all milk price in 2027 compared to this year, averaging $20.95 per 100 weight, which is 30 cents lower than the 2026 forecast. If we look at pork production, commercial pork production in 2027 is forecast at 28.255 billion pounds, up a percent from production this year. National producers sold live equivalent hog prices are projected to average $60.50 per hundred weight in 2027, a 2.7% decline compared with prices in 2026. U.S. pork exports are expected to increase next year to 7.33 billion pounds, an increase of 1.4% over revised 2026 exports of 7.232 billion pounds. As in 2026, Western Hemisphere nations account for an increasing share of U.S. exports in 2027. Take a quick look at commodities and agreement on U.S. ag sales to China outlined by the White House is raising optimism for a pickup beyond soybeans, further reviving crop flows that have been weighed down by trade tensions. China has agreed to buy at least $17 billion annually in American ag products through 2028, according to a fact sheet posted Sunday by the White House following President Trump's visit to Beijing. It said that would be in addition to the soybean pledge from late 2025 when they initially met in a bid to ease the rift between the two sides. Most active corn futures rose as much as 3.8% on Monday, the biggest intraday gain in six months. Wheat gained as much as three and a half percent. Soybeans and cotton were also higher. China is one of the world's largest ag importers, and the moves marked a reversal from last week when crop prices plunged on a lack of detail over farm good purchases during the summit. The U.S. announcement appears particularly bullish for wheat and corn futures given the purchases will come on top of the initial soybean deal and likely spread into other ag products. The White House also said China has restored market access for U.S. beef by renewing export registrations for more than 400 facilities and adding new listings. Finishing up in financial news, Walmart and Amazon are racing to speed up online order deliveries in rural areas, a rich source of untapped sales that major retailers long wrote off as too sparsely inhabited, too remote, or too poor to serve profitably. Walmart has a running start in the contest to build a loyal customer base in rural America. About 90% of U.S. residents live within 10 miles of a Walmart store, and 45% of the company's full service supercenters are in places with populations under 20,000, according to a report by investment bank Morgan Stanley. Competition for the underserved market, which the bank's analyst estimated could be worth up to a trillion dollars in annual sales, has intensified as remote workers swell the populations of small towns and communities on the far fringes of multiple of metropolitan areas. Same technology that makes it possible for more people to do office work from wherever they want is making it easier for the nation's two biggest retail companies to get merchandise to them more efficiently. Amazon last year invested $4 billion to bring same day or next day deliveries to 4,000 smaller cities, towns, and rural communities. In a letter to shareholders last month, CEO Andy Jassy said the average monthly number of Amazon customers receiving same-day deliveries doubled in 2025 compared to the year before. Amazon is using artificial intelligence-based tools to better forecast demand while opening small micro hubs in rural areas. Well, that's all for now. As always, thanks for tuning in. If you found it useful, leave a comment, subscribe, share, tell all your friends. I'll be back tomorrow with more news across the ag and financial markets. Until then, I'm Mike Opperman, and goodbye from now.