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Cattle in feedlot DarcyMaulsby/iStock/Thinkstock

FEEDSTUFFS MEAT PRICE OUTLOOK: April 2, 2019

Beef producers holding out for more money after weakening prices.

Beef: Following the sharp drop in the futures market last Monday, which was exacerbated by the bearishly construed “Cattle on Feed” report, and further weakening into midweek, producers relented on holding out for higher money last week. Cash trade began to develop midweek at mostly $126/cwt. live, down $2 from the prior week, with dressed sales in the North also $2 lower at mostly $206. The Choice cutout reached $229.51/cwt. last Tuesday, the highest level since late May 2018, before falling to the $226 area by the end of the week. The weekly average was down just modestly, with rib, round and brisket primals showing declines. Following the strong rebound in the cattle harvest during the week ending March 29, last week's total eased back to 614,000 head. While this was 17,000 head below the prior week, it was 24,000 head above last year. Beef production was estimated at 493 million lb., down 3.1% from the previous week but 2.6% above a year ago.

Pork: The cutout spiked again last week, even though only support was expected. The recent price increases were not sustainable, especially given the 14% premium over the prior year. Buying is expected to subside for several primals as April progresses, with a price reset expected to be evident over the next 30 days. Taking away all of the recent gains is not probable, but seasonal easing should allow half of the increases to come off by the first week of May. Any lows accomplished in the next 30 days likely will be over in a flash, with buying expected to carry the seasonal wave strongly in May. For now, expect weakness, unless trade with China becomes the new trump card.

Poultry: In the U.S. Department of Agriculture’s latest “Chickens & Eggs” report released last week, broiler-type chicks hatched during February were up 2.1% compared with a year ago to nearly 750 million head. The chick hatchings reported by USDA for February came in line with the average of the weekly reported chick placements for February. Extrapolating this metric through monthly totals suggests that chick hatchings for March will be up roughly 1.3-1.6% from the previous year. IEG Vantage estimates roughly 840 million broiler-type chick hatchings for April, which is up 1.5% versus the same monthly total a year earlier. This total has been adjusted down slightly from previous projections. Second-quarter chick hatchings are currently forecasted by USDA at a 2.3% increase above prior-year estimates. Productivity rates have declined recently. Broiler chicks hatched per layer were down 0.3% compared with a year earlier during February and down 1.5% from a year ago during January.

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 susan.dahlgren@farmprogress.com for more information.

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