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FEEDSTUFFS MEAT PRICE OUTLOOK: April 18, 2017

Hams remain steady after Easter buying season.

Beef: A firmer undertone in the beef market and much weaker basis, along with the still-tight front-end supplies of market-ready cattle, led to a rebound in the cash trade this week, at mostly $128/cwt., up about $2 from the bulk of sales during the week ended April 7. A few more purchases for deferred delivery, at lower prices, will continue to augment live inventories later in the spring, along with the expected rise in fed cattle supplies as the larger late-fall feedlot placements become market ready. Active spot beef sales in early April, coupled with more limited production in recent weeks — estimated steer and heifer slaughter plunged nearly 40,000 head from the late-March spike, slashing nearly 35 million lb. from weekly beef output — and renewed buyer interest, boosted the blended cutout to almost $208/cwt., up about $3 from the prior week’s close. The continuing slide in carcass weights and erosion in quality grades suggest that marketings are becoming more “current” amid strong feedlot leverage, which could temper production plans in the weeks ahead.

Pork: The price of hams remained mostly steady last week, while several other primals experienced some price softness. The Easter buying season has been over for almost two weeks now, and prices for hams are not dropping significantly, as some may have hoped. Also, larger hams usually are at a discount to the middle-weight hams, but that is not the case currently, suggesting that the industry is willing to step in at these price points and put support in the larger hams for grinding for lean content as well as continued export movement. As the entire industry prepares for usual seasonal price increases, albeit with tempered expectations for highs, hams seem supported currently and may not experience prices below $50.

Poultry: As expected, breast meat prices continued to work sideways in the early days of trading in the second full week of April. With planning shifting towards features surrounding traditional needs for the upcoming holiday, little attention is garnered in the way of white meat offerings. Current U.S. Department of Agriculture boneless/skinless breast meat values have been hovering right around $1.30/lb. over the last several weeks. This compares with values averaging $1.08/lb. a year earlier and an average of $1.35/lb. for March over the last five years. The obvious question is: What is causing a premium compared with last year, or, rather, where was the discounting coming from in 2016? In 2016, boneless breast meat values saw an incremental increase early in the year, but this was due to a stronger presence in tenders. Expectations for 2017 are for market values to continue working sideways at current levels that might be overdone a little through the next week or two before finding additional strength through May and June.

For a more detailed look at the weekly forecasts for the various meat sectors and meat cuts, subscribe to the "Meat Price Outlook." Contact Susan Dahlgren at [email protected] for more information.

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