FEEDSTUFFS MEAT PRICE OUTLOOK: Feb. 5, 2019

Higher chicken wing prices due to Super Bowl expected to continue into March Madness.

February 5, 2019

2 Min Read
FEEDSTUFFS MEAT PRICE OUTLOOK: Feb. 5, 2019
Credit: buhanovskiy/iStock/Thinkstock.

Beef: A small amount of cash cattle trade began early Friday afternoon in the North at $198-199/cwt. dressed, up $1-2 from the bulk of sales during the prior week. Producers in the South held out until very late Friday afternoon, when packers raised their bids to $124/cwt., a dollar higher than the week before. Weekly average cutout values increased by more than $4 this week, with the blended cutout getting up to the highest level since last June and about $10 higher than at this time last year. Strength was shown across all of the major primals. Spot market sales volumes slowed considerably, particularly on the end meats. Weaker beef demand in February could lead to pressure on cutout values in the next few weeks. Winter weather negatively affected cattle harvests this week, with the estimated total dropping to 593,000 head -- 17,000 head below the previous week and 20,000 head under last year.

Pork: Producers are undoubtedly in the red and have been losing on every hog for the last three months, with that trend likely to continue in February. The difference in February, however, is the potential slowly move back to breakeven prices. Sharp losses were in play during December, with January improving only nominally. Margins are expected to slowly improve over the month of February, but the improvement will be at a slow grind and will come on the back of two factors: first, a relative tightening of hog supply from January's record harvest, and second, from slight concessions from packers. The cash forecast for producers this year is barely at breakeven, all of which rests on the heels of export demand and how that will materialize. Packers are expected to do well this year, possibly better than in 2018 and well above the historic average.

Poultry: Attention for broiler market participants and observers alike has been particularly heavy on white meat and wings lately as preparations were finalized ahead of Super Bowl. Both tenders and wings saw significant advances in recent weeks. Wings, at an average of $1.91/lb. for the week ending Feb. 1, are nearly 13 cents/lb. higher, or up 7.3% when compared with the final week of January a year earlier, which is impressive given that stocks of wings were 31% higher than the previous year to end November and are estimated by IEG Vantage to be 18% higher than they were at this time last year. While peak demand has been the main contributor to the wing rally, the recent strength has much to do with weather-related events as well and buyers’ willingness to forgo negotiations in favor of coverage. The biggest question for wings is to what extent they will plummet over the next several months. Prices through March Madness can be expected to maintain a fair percentage of their Super Bowl levels, perhaps even 90%.

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