Beef: The percentage of cattle grading U.S. Department of Agriculture Prime continues to rise at a record pace. Prime grading for the week ending Feb. 24, reported at 8.62%, was record large and 76.8% over the five-year average. From the weekly comprehensive report, total Prime load counts have average near 20% larger than year ago throughout the first nine weeks of 2018, with the Prime cutout running 6% over last year. With the Choice cutout up closer to 8% year over year, the Prime/Choice spread has narrowed, declining towards the $11 area reported two weeks ago. The spread tends to widen from mid-spring into late summer, but the larger supplies of Prime grade appear to be pressuring the marketplace, with the spread declining 48% over the past four weeks. At narrowing prices, more Prime product is expected to show up at both retail and foodservice as well as sold for export.
Pork: The Iowa/southern Minnesota barrow and gilt live weight figures released last week showed that animals gained an additional 0.6 lb. during the week of March 9, which is 4.6 lb. above prior-year levels. At this time last year, packers had pulled hard on the available hog inventory through February 2017 as demand for bellies was extremely strong and exports were clearing sufficient product through the marketplace. Consequently, animal weights were lower than average last year but still were on par with the seasonal trend. Starting in 2018, January began to move in a normal fashion for animal live weights, but hogs began to add weight due to continual weather-related harvest delays. As the harvest delays cleared, it became evident that packers were not willing to make significant efforts to clear up those hogs as margin levels were not enough of a motivating factor. The industry now has two weeks of strong, counter-seasonal weight gain and a 5 lb. spread.
Poultry: On March 8, USDA’s Economic Research Service released its monthly livestock and meat international trade data, which contained estimates for U.S. broiler meat exports through January 2018. Shipments throughout January totaled 548 million lb., and while this was 4% lower than the prior month, it was still 3.2% higher than the five-year average. Total broiler meat exports this calendar year are projected to beat last year’s by 2.9%, at 6.98 billion lb. total. Continued growth in exports should help the overall supply situation, which still appears too large for seasonal price rallies to take full effect. One caveat to the projections of increasing exports is the retaliatory impact of the recently imposed tariffs on imports of steel and aluminum, which could, in turn, limit the U.S.’s ability to increase agricultural exports.
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