Beef: Continuing declines in carcass weights and eroding quality grades still point to tight front-end supplies of market-ready cattle, which helped spur last week’s cash trade to the $136-138/cwt. range, up $4-8 from the week prior. Although spot beef sales have slowed, large out-front commitments continue to limit spot availability with the blended cutout, which closed last week near $218/cwt., about $4 higher than the previous week’s close. Also, further strength in the middle meats could propel the cutout back into the $220-225/cwt. range in the weeks ahead before trending lower again into the summer. Although front-end availability of fed cattle continues to be tempered by aggressive feedlot turnover rates, larger placements at heavier weights point to larger late-spring and summer fed cattle supplies. The seasonal and year-over-year rise in domestic fed beef supplies heading into the summer months will be tempered by lighter carcass weights and larger exports but may still exceed last year by 5-6% and weigh on both cattle and beef prices.
Pork: The cutout moved surprisingly lower last week as the industry prepared for the next wave of pork demand. Coming out of Easter as well as traditional seasonal lows reached during a typical April, the industry is positioning for what happens next. This is a pivotal time when product demand seasonally trends higher at the largest rates of increase for any time of year. This year, despite 4-5% larger supplies, is not expected to be any different than normal. The benefit for this year is that it is starting from lower levels than last year and significantly lower levels than recent history. As demand for differing primals strengthens, the cutout is expected to move forward with it. The forecast is to add approximately $2-3 per week.
Poultry: The most recent report for ending stocks of leg quarters in March showed a slightly greater reluctance in the market place to accept higher prices during the month. While leg quarter clearance was slightly more cumbersome than it was a year earlier, favorable breast meat pricing in February and improved feature activity provided an incentive for elevated clearance levels during the month. Ending stocks of breast meat for March totaled 179.2 million lb., which brought the metric below a year ago for the first time since October. Demand for breast meat is expected to be better than a year ago through April, and, as such, further declines in holdings from March of roughly 7 million lb. should not be unreasonable; if anything, clearance may turn out to be better than this by month's end, which should bring stocks a full 8% lower for April compared with year-ago levels. Improvements in breast meat quality and feature activity levels are leading to an expectation for cold storage stocks to be 7.9% lower than 2016 overall this 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.