Beef: Packers continue purchasing cattle aggressively, with last week's total cattle purchases reportedly 23% larger than last year and 36% over the three-year average. Of the increase, a disproportionately large percentage of cattle was listed as being sold in the 15- to 30-day negotiated purchase window. The number of cattle purchased in the 15- to 30-day window (falling into the "captive supply" category) has increased each week across the past four weeks and made up approximately 11% of total cattle purchases last week. Seasonally, cattle buying tends to ease from March into April, loosely in line with expectations for slowing slaughter schedules and cooler cleaning, thus tempering total cattle needs. The larger forward purchases heading into historically flat late-spring harvests are of particular interest and likely indicate packer desires to increase captive supplies, providing larger quantities of available cattle on hand to make adjustments to overall slaughter volumes heading into late spring to early summer.
Pork: The cutout defied the forecast again and moved in concert with seasonality and last year's price direction. Previously, it was thought that primals would not see further weakness at last week's attractive price points, but the supply is proving ample enough to continue slight easing. The forecast for the cutout is for it to begin moving higher successively after last week into the end of June. For the next two or three weeks, there is additional opportunity for softness in hams, the loin complex and butts. If that materializes, the risk is that the cutout could move below $70 by $1-2 before moving higher again after mid-April. Despite the record-large supplies, the cutout still should submit to the seasonality of demand, coupled with a healthy discount under last year by July.
Poultry: Broiler slaughter during February totaled 693.7 million lb., which was up 2.1% from the same month a year earlier. Broiler meat production on a ready-to-cook (RTC) basis was up 3.3% from the prior year during February to total almost 3.26 billion lb., nearly even with Informa Economics IEG’s 3.28 billion lb. projection for February. Production advancements minimized wholesale broiler breast meat marketings in February but gave way to stronger pricing during March. IEG is projecting that the number of broilers made available to the marketplace during March will be 6.8% below the same month a year earlier (down 2.5% on a per-processing day basis). While additional consumer support for broiler meat can be cited for the tightness that has emerged, supply growth restraint can help explain the support to the broiler cutout as well.