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FEEDSTUFFS MEAT PRICE OUTLOOK: Nov. 21, 2017

Cattle grading Choice declines as percent of Select or lower increases.

Beef: Larger total beef production, coupled with a tick lower in overall quality grading, boosted the percent of cattle grading Select or lower over the past few weeks. In fact, over the past three reporting weeks, cattle grading Choice declined by 2.8%. This, coupled with seasonal declines on carcasses grading Choice or better, saw total Choice or better beef production decline by nearly 5 million lb. In contrast, beef production in the Select or lower category has grown by 18 million lb., or nearly 19%, throughout the same time frame. Larger total cattle slaughter, a relatively current front end of market-ready cattle, normal seasonal declines on carcass grading and minor adjustments to carcass grading instruments all have been noted as contributors to the recent grading declines and subsequent boost in Select beef production. Choice beef production is expected to continue expanding year over year, but subsequent increases may be more modest moving forward.

Pork: Packers continue to exert leverage based on margin expectations as they are still paying a premium for hogs. Cash markets are priced higher than last year by 40%, which appears to be slowing demand for hogs currently. Cash hog markets are expected to decline successively in the next two to four weeks, with price low forecasts adjusted higher than thought just a few months ago. Hogs are expected to lose 12% from current levels by the middle of December, which could put the price back on parity with last year's at that time. Seasonally, the risk is for only another week of price easing; however, with the way hog weights have been moving, it seems as though producers have hogs available, with levels increasing thereafter. This puts more supply in the marketplace than probable demand for the short term, and that should allow for price easing to continue for several more weeks.

Poultry: Weekly turkey slaughter during the week ended Nov. 10 was a little bit lower than Informa Economics IEG anticipated. IEG’s fundamental forecast suggested a weekly slaughter of roughly 5.53 million head for the most recently reported processing week, based on corresponding poult placements and available supplies that were mature for slaughter for the week prior to fresh holiday delivery. That total would have been a little more than a 1% drop from the same week a year prior. Instead, the industry processed just 5.259 million head, which was 5.4% lower than the prior year, bringing the six-week turkey slaughter total down 0.7% from a year ago. A 1.7% drop in year-to-date turkey slaughter can be derived from the weekly slaughter data, which include a 6% drop in young hen slaughter from the 2016 pace. Year-to-date young tom slaughter is up 1% from a year ago, but young breeder slaughter has increased nearly twofold from last year’s pace and is at a cumulative 1.16 million head.

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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