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FEEDSTUFFS MEAT PRICE OUTLOOK: October 24, 2017

Feedlot placements perceived as bearish surprise.

Beef: The U.S. Department of Agriculture’s latest “Cattle on Feed” (COF) report, which revealed September placements at 113% of last year's record small placement total, will be perceived as a bearish surprise, with the range of pre-report estimates for this month’s COF report reportedly wide, spanning 13 points -- from 103% to 116% -- over last year. September placements of 2.2 million head, or 113.5% more than a year ago, coupled with marketings at 102.9% of last year, left cattle on feed as of Oct. 1 at 10.8 million head, or 105.4% larger than a year ago. This month's COF report should weigh on the early 2018 futures contracts this week. The cash trade is expected to move mostly sideways to modestly lower, holding in the $109-114/cwt. area throughout the balance of October and into November.

Pork: Hog weights moved up quickly and stayed above the average by roughly 1 lb. starting in September. This was evidence that more hogs were available sooner, with hogs gaining additional weight as they were awaiting their turn in the queue. As time has progressed and this pig crop is harvested, the industry is working its way through those two heavier-weight categories and is likely to be through them before the middle of November. So far, weight has not come off of those hogs, but they have not added weight at the same rate due to such strong harvest levels (averaging more than 3.5% higher than last year). The harvest levels have been lining up with available market hogs. Packers are working hard to stay current.

Poultry: Front-end supplies of turkeys ready for processing during January and February 2018 were revealed this week in USDA’s latest “Turkey Hatchery” report, which noted that net poult placements during September totaled 21.48 million. That total was slightly above the Informa Economics IEG forecast of 21.29 million but well below the totals during June through August, which ranged from 23.9 million to 24.24 million poults.  It is not atypical for poult placements to decline during September, as more turkeys are needed during November and December than January and February. Net poult placement for September was just 100,000 shy of total placements during the same month a year ago, suggesting -- all else being equal -- that turkey production during January and February should see a slight decline from a year ago, with an average slaughter of 18.85 million head. The number of eggs in incubators during August was revised up from 29.69 million to 29.73 million, according to the “Turkey Hatchery” report, which suggests that poult destruction remains strong.

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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