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FEEDSTUFFS MEAT PRICE OUTLOOK: Dec. 19, 2017

Beef carcass weights moving mostly sideways.

Beef: Carcass weights continued moving mostly sideways, with steer weights down just 1 lb. week over week, and look to have posted a seasonal peak at 904 lb. during the last week of November. Heifer weights, on the other hand, increased again last week, pulling the weighted average fed cattle carcass weight up a pound from the week prior and leaving this year's weighted average 10 lb. below 2016. Seasonally, carcass weights peaked a bit late this year, but given the fact that they have been running well below the year-ago level for nearly all of 2017, there may be some catching up to do in the opening months of 2018. Carcass weights in the new year are expected to claw their way back above this year's sharp decline, and given expectations for larger placements and increasing fed cattle harvest rates, the beef production forecast is nearly 3% higher than 2017.

Pork: Hog weights move seasonally based on the availability of hogs (weather-related production changes in breeding as well as weight gain/loss) as well as packer demand for hogs based on fresh product demand. Something else can influence hog weights, however, unrelated to production: packer margins. Looking at the spread between last year and this year, the spread is 5 lb. Last year, packer margins were record high, motivating packers to pull hard on hogs and, thereby, increase hog throughput. This led to weights heading counter-seasonally lower as hogs were moved out of barns sooner rather than later, based on finishing schedules. This year, packers' margins were half of what they were last fall, decreasing the motivation to pull hard on the herd and allow weights to move in seasonality. Harvest levels are only on par with last year.

Poultry: Informa Economics IEG calculated that chick placement as a percentage of eggs hatched in the three previous weeks came in at 81.2%, which was up from the prior week but almost even with November. It was also down from last year’s 81.9% during the same time period. In addition to the shakedown in hatchery operations, broiler slaughter came in at 163.37 million head, with an average of 6.27 lb. for the week ended Dec. 9. Slaughter was up 1.8% from the same week a year earlier, and weights were up 2.5%. Slaughter over the last six weeks averaged a 2.3% increase over a year ago, while live weights have declined by 0.2%. Ready-to-cook (RTC) broiler meat production came in at 771.86 million lb., up 4.4% from a year ago, which helped prop up the cumulative RTC production to a 1.4% increase compared with a year ago. At this point, the weekly slaughter reports are edging toward a 1.4% increase in RTC broiler meat production overall for 2017 versus 2016.

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