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FEEDSTUFFS MEAT PRICE OUTLOOK: March 27, 2018

Cow slaughter running well above year-ago levels.

Beef: Total cow slaughter continues to run well above year-ago levels, up 7.2% year to date. The increase in cow slaughter has been relatively one-sided, with beef cow slaughter up 9.7% from the prior year, while federally inspected dairy cow harvests are up 3.6%. Heading into the second quarter, the increase is expected to moderate somewhat, with a forecast near 5% over the previous year; beef cow harvests are expected to average 7% over the year-ago level and dairy cow harvests just 2-3% higher. While more aggressive than initial expectations, beef cow slaughter rates indicate a slowing of herd expansion but leave expectations for an expanding cow herd throughout 2018 intact. In the nearer term, total cow slaughter is expected to ease from the current area of 120,000 head per week towards 110,000-112,000 head through early summer before moving higher again from late summer into fall, reaching peaks in the area of mid-120,000 head.

Pork: Cash hog markets softened again last week amid ample supplies and seasonally weak demand. For now, hogs are plentiful, as the harvested supply still is averaging more than 3.5% over the prior year. Hog weights have now come down two weeks in a row, and it is probable that these hog harvest levels that are higher than expected are a result of hogs getting cleared up and not a potential surprise increase in this new pig crop that would be revealed Thursday by the U.S. Department of Agriculture. As the cutout has eased the last two weeks and is expected to stay soft for a few weeks, packers will likely continue to pressure hog prices lower for the time being. This leverage by the packers should continue for a few weeks, with further downside potential on cash hog markets. Hog prices are well below breakeven for spot cash hogs, and settlement hogs are crossing into negative territory. Producers are projected to stay in the red for the next few weeks until seasonal demand sets in.

Poultry: Broiler-type hatchery operations have been steadily running ahead of year-ago levels for a good stretch now. This is expected to continue to show slight improvements compared to the prior year through the fall months of 2018 and then begin to ramp up ahead of processing capacity expansion slated for late 2018 and into 2019. USDA recently released the latest “Chickens & Eggs” report, which provided an updated account of front-end broiler integrator intentions. Most front-end supply totals were in line with expectations. Broiler-type chicks hatched totaled 734.6 million during February, which was up 0.6% from the same month a year earlier. March 1 broiler-type hatching egg layers were reportedly even with the February monthly total, at 57.9 million, which was up 3.5% from the previous year.

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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