Beef: The continuing slide in beef prices, limited slaughter volumes and more comfortable live inventories, along with the still-strong basis, weighed on cash prospects last week, although few sales surfaced by late Friday, with bids holding at $125, about $3 under the bulk of last week’s trade. Larger out-front cattle purchases in recent weeks, coupled with prospects for seasonally larger fed cattle supplies in the weeks ahead, may continue to weigh on cash prospects, along with the strong basis and steep discounts on late-spring and summer futures. The blended cutout slipped near $206/cwt. at week’s end, off more than $6 from the prior week’s close. However, larger spot sales volumes and more moderate production, coupled with renewed merchandising interest at the lower price, may spur a price rebound ahead of the spring and early-summer holidays. Weaker beef prices and deteriorating operating margins tempered production schedules, with total slaughter dipping to 573,000 head, well below last week’s 593,000 and the late-March spike to 613,000.
Pork: February trade was illustrative that exports were the critical factor for pork product movement in the first quarter. January and February were record large for pork production, with a combined 4.14 billion lb. While February 2017 production alone holds second place only to last February, it is a close second in the amount of pork product that needed to clear the market. Exports for February 2017 also hold second place for total pork exported, coming in at 450 million lb. (first place was 456 million lb. in 2012). This February, 22.6% of product was exported, with the five-year average being 20.7%. This net increase in exports helped to create a net negative supply domestically, as 63 million lb. more pork left the U.S. in February 2017 versus February 2016.
Poultry: In the most recent U.S. Department of Agriculture trade data for U.S. broiler meat, exports were up just 2.2% in February from the prior year to 547.5 million lb. Combining this with January exports of 557.2 million lb. and an expectation of 623.8 million lb. of broiler meat to export channels in March provides year-over-year improvements of 9.7% during the first quarter of 2017. The risk here is with importing countries' actions regarding bans of U.S. broiler meat due to the presence of avian influenza in counties where there is a high concentration of broiler meat production. This week, Chile extended its ban of U.S. broiler meat imports to include additional counties in Alabama, as well as Georgia, due to the recent low-pathogenic avian influenza outbreaks. Chile ranked number 12 on the list of major importers of U.S. broiler meat in February, claiming just 2.7% of total U.S. broiler exports.
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