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FEEDSTUFFS MEAT PRICE OUTLOOK: Jan. 9, 2018

Beef carcass weights make counter-seasonal move higher.

Beef: Despite expectations for carcass weights to run mostly steady to modestly lower through the last couple of weeks of 2017, weights made a counter-seasonal move higher in the latest report. With one more reporting week left for 2017 (actual data lag by two weeks), weights are now forecasted to be nearly even with to slightly above 2015 for the final reporting week of the year. In the fall of 2015, carcass weights hit historic highs, which persisted into much of 2016 before easing into midyear. The heavier carcass weights for the week ending Dec. 23 led the year-over-year change in beef production (up 5.8%) to exceed the year-over-year increase in cattle harvested (up 5.1%) for the first time since the first week of 2017. In 2017, beef production was up an estimated 3.8%, with 5.3% more cattle slaughtered throughout the year.

Pork: The industry was counting on hog availability as production levels ramp back up from the holidays. However, cold weather has prohibited the movement of some animals, making delivery of contracted hogs less dependable. This put additional demand pressure on spot cash hogs as harvest levels were down and spot cash prices moved higher. Hog prices do not normally retrace during this time of year, so warmer temps this week mean hogs will flow more freely. However, producers are not likely to give up price. This could put a sideways effect in the hog market over the next week, with some slight strength. It could also keep hogs from losing weight on a normal, seasonal basis this time of year. Seasonal price increases for the next six or seven weeks are likely, on average $1-2 per week. Highs in February are not expected to reach prior-year levels as the bellies are expected to stave off last year's February price spike.

Poultry: The latest USDA “Poultry Slaughter” report indicated broiler liveweights averaged 6.27 pounds during November, down slightly from October but up 1% from a year ago. The November broiler liveweight average brought the average from the four most recent months to 6.25 pounds, which is up 0.09 pound (or 1.5%) when compared with the same period a year ago. The relevance is that live weights were actually showing signs of decline during the third-quarter 2016, then remained relatively flat through the following three consecutive quarters, after better than 1% year-over-year increases occurred in the 12 preceding quarters. The recent correction higher suggests larger supplies of birds, improved conversion rates and a favorable feeding environment. Current projections are for a 0.6% increase in bird weights on average for 2017 overall, and for a 0.1% reduction during 2018, when compared to 2017. However, it would not be unprecedented to see broiler liveweight growth continue to outpace projections 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.

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