Beef: Following sharply higher cash trade last week of a nearly $5 jump week over week, packers' kill cutting rhetoric became a reality. Last week's harvest slipped well below the prior week’s 596,000 head, coming in at just 572,000 head, about 15,000 head under the initial estimates and nearly even with a year ago. Following the smallest kill of 2018, forecasts for the next couple of weeks have been tempered from the low 600,000-head area towards a more modest 590,000- to 600,000-head range. Show lists are expected to begin expanding over the coming weeks, lowering inventory costs for packers and boosting overall margins, which should encourage mid-March kills to bump back into the 605,000-head area, with fed cattle harvests projected in the upper 470,000- to lower 480,000-head range.
Pork: The cutout posted average gains last week despite trending sideways, as the move upward on Monday was able to stay supported. Further strength above the average gain was not expected, as hams and bellies simply added back to the price from the over-correction three weeks ago. Average gains are expected again this week, without further weakening below current values. It is possible that the seasonal lows have been priced into the cutout early with any price softness in April likely to be just that, price softness. Currently at a discount to the prior year, the cutout is better positioning itself to move more product at lower prices. Gains these next few weeks are expected, only because price may have made an over-correction. The cutout should be able to find deflation in May, June and July with the probability of average annual deflation under 2017 as the year progresses.
Poultry: Prices for wings showed further declines last week, dropping another 15 cents to 154.8 cents. Spot markets for wings have been subject to turmoil since early spring 2017, with a fair amount of blame being tossed around by both outsiders and market participants. Probably the only participant that has not received a scowl for actions that led to an imbalance in the typical ebb and flow of wing supplies has been the retailer. Over the last few weeks, retail featuring activity for fresh tray-pack wings has been particularly strong. Looking back at 2017, there was a strong advance in featuring of wings during the second week of March, after which even more stores jumped on board during the following week. Wings have been featured at an average of 4,104 stores per week so far this year -- nearly double the weekly average of the year earlier. With national wing-centric foodservice outlets dropping back their bone-in feature activity and wholesale markets showing seasonal declines, there should continue to be good opportunities for retailers in the near term.
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.