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FEEDSTUFFS MEAT PRICE OUTLOOK: June 27, 2017

June 1 feedlot inventories up 3% from last year.

Beef: Following record-large placements from March, which were up 12% from a year ago, both April and May yielded double-digit year-over-year increases in placements, with April up 11% and May up 12%. Spurred by historically profitable cattle feeding returns and favorable swaps on feedlot replacements, cattle feeders placed approximately 12% more cattle on feed in March through May, or 639,000 additional animals, with placements of animals weighing more than 800 lb. record large in each respective month. The larger placements in recent months have been coupled with an aggressive marketing rate as well, but marketings were outpaced by placements, leaving June 1 feedlot inventories 3% larger than last year. Weekly average steer and heifer slaughter eased to just 4% in May, down from the7-9% increases in March and April. Fed cattle slaughter will need to hold near the 500,000- to 510,000-head range in order to maintain "currentness" on the front end, but continued lighter carcasses and increases in weekly beef export sales may keep enough seasonal demand in play to clear the expanding fed cattle inventories and should avoid letting prices fall back into the $98-100/cwt. range observed last fall.

Pork: Cold storage numbers for May revealed lower amounts, which is normal this time of year. April is usually the peak in cold storage supplies as the pork industry draws upon stocks in May for product continuity during the start of the summer months, when fresh product might not always be ample to meet demand. This year has been no different; however, the demand on fresh product continues to be greater than normal. The pork industry allowed levels to start the year off low, as fresh supplies were forecasted to be record large, with many banking that the fresh product price would be lower than stored product. While this is true for some product, it has backfired on the industry for a few critical pieces during summer pork product demand.

Poultry: Recent concerns over hatchability rates have become a strong topic of discussion in the broiler community again. Late last fall, a disparity between chick placements and lagged egg sets was noticed in the weekly hatchery reports when comparing the metric to year-ago numbers. Since the fall, the hatchability rate has remained relatively low, as chicks placed averaged just 81.6% of eggs set in incubators three weeks earlier. Combined with a flat to marginally larger-than-expected broiler-type egg-laying flock, the consistently lower-than-expected chick placements have developed into slightly lower-than-projected slaughter rates; combined with the slightly lower-than-average broiler slaughter weights, this has matriculated into a year-to-date production pace (on a ready-to-cook basis) just 0.8% ahead of year ago.

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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