Beef: Since peaking in June 2015 at $6.15/lb., retail beef prices have steadily declined, dropping 5% from 2015 to 2016. The latest U.S. Department of Agriculture data for all fresh beef in June revealed a retail price of $5.82/lb., 3.5% -- or 20 cents -- higher than May and about even with a year ago. Considering the larger year-over-year placement rate from March through June in which an additional 884,000 head were placed on feed than the year prior, beef production in the back half of this year is expected to be up near 4% from a year ago, pressuring the cutout lower and setting up a resumption of month-to-month declines in retail beef prices. Additionally, as the blended cutout has declined, the spread between the pork and beef cutouts has narrowed, which may further encourage retailers to add beef features back into ads deeper into the year. Increases in domestic demand, as well as aggressive export programs, will be pivotal to keeping the additional supplies of beef anticipated throughout the remainder of the year from becoming burdensome to the beef industry.
Pork: Cold storage stocks have a very seasonal trend of moving lower from a May time frame as the industry draws on the stocks for intended purposes. The descent from this year's highs, however, is from lower highs than normal, with a larger number of hogs year over year helping cushion the pull on cold storage stocks. Moving from June, July usually bears additional descent, but last year, the industry was able to add to stocks in July, and expectations for this July are mixed. Pulling out additional product in July this year is almost certain for bellies, but the subtraction of bellies and trim is not expected to make up for additional hams and ribs in July storage numbers.
Poultry: Broiler slaughter generally has been in line with expectations on a weekly basis throughout much of the first half of the year. According to USDA, the six-week moving average for broilers slaughtered under federal inspection is just 0.5% ahead of last year. This compares with a 2.0% year-over-year increase in the six-week broiler slaughter average a month ago. The most recent monthly poultry slaughter data were released last week and included total broilers slaughtered under federal inspection during June. The expectation was that the stronger weekly numbers would hold consistent with the data published for the end-of-month totals. Broilers slaughtered under federal inspection for June totaled just over 762 million head, which was 1.0% more than the amount processed during the same month a year earlier. This closes out the second quarter with 2.24 billion head, a 1.3% improvement from the same quarter a year earlier and the highest broiler slaughter number since the third quarter of 2008.
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.