Beef: The U.S. Department of Agriculture’s most recent “Cattle on Feed” report was the first quarterly report of the year, offering slightly more insight into the breakdown of the on-feed inventory, specifically inventories by sex. Heifers and heifer calves (heifers) on feed on Jan. 1 totaled 4.15 million head, up 14% from the year prior and representing 36.2% of the overall on-feed inventory for lots with capacities of 1,000 head-plus. Generally, as the makeup of heifers drops below 36%, the industry is viewed as expanding, with the inverse equally true. Heifers on feed as a percentage of total on-feed inventories dropped below the 36% mark in 2014 as aggressive expansion ensued over the years to come, but it edged back over the perceived expansion/contraction line on Jan. 1. While liquidation is not the implied outcome of this number, USDA’s “Cattle” inventory report released last week confirmed producer attitudes towards slowing overall herd growth moving forward.
Pork: The pork cutout, on an average basis, has moved slightly lower but still suggests neutral price movement. Prices are not expected to retrace at this time, but further advancements may not be in the works either. Having more product to market right now than the domestic market experienced last year could help keep product pricing from experiencing the same demand impact of last year. Seasonally, the movement would suggest three or four weeks of price softness, which certainly could materialize as bellies might turn back down after next week and hams could find resistance from moving higher. Other items contributing heavily to the cutout price may move higher, but at less than a seasonal pace, which could put the cutout on a sideways movement throughout February.
Poultry: With the Super Bowl happening this past Sunday, it is worth taking a look back at market conditions that have led up to peak seasonal demand. With a steady increase in feature activity, both foodservice and retail last year tightened supplies, but this was not overly burdensome to the marketplace compared with years past. However, both retail and foodservice feature activity encouraged stronger chicken wing consumption rates beyond the typical seasonal declines into June 2017, which pressured ending stocks. The higher prices for wings drove down consumption and ultimately led to unseasonably lower prices during November and December. Two weeks ago, wholesale values on wings averaged $1.79/lb., according to USDA. Last week, the average wholesale value for wings was up just 2 cents/lb. from the week prior, pushing the monthly average to $1.72/lb. for January. Wing supplies are expected to remain tight over the next several weeks, with February prices for wings projected in the mid-$1.80/lb. area and March 3-5 cents lower.
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.