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FEEDSTUFFS MEAT PRICE OUTLOOK: Dec. 11, 2018

Georgia Port Authority Georgia Port
October export data reveal another month of record volumes of U.S. pork leaving the country.

Beef: By late Friday afternoon, there were too few cattle marketed to establish a trend, although there was a steady to firm undertone to the market. After reaching the $118.00-118.50/cwt. area in the South during the last week of November, fed cattle prices are expected to get to the $120 region before the end of the year. The Choice cutout was mostly steady last week, with the average on the Select cutout a little weaker. Gains on ribs and loins mostly offset weakness in many of the end meats. The next seasonal trend on ribs and loins will be significantly lower, pressuring cutout values until the end meats pick up seasonal gains in late December and on into the new year. While there were expectations of last week's cattle harvests being in the region of 640,000-645,000 head, the U.S. Department of Agriculture came out with a much higher estimate of 666,000 head. This compares with 640,000 head the prior week and 639,000 head last year. Beef production, estimated at 552 million lb., was 4.4% larger than the prior week and 3.5% smaller than last year.

Pork: Exports for October revealed another month of record volumes of U.S. pork leaving the country. Packers shipped out almost 502 million lb., which was a record for any October and bested the prior year by almost 6 million lb. This level was within 1% of forecasted volumes for October with the cutout at a slight premium over the prior year. This slight gain, on a slight premium, simply reinforces the notion that U.S. pork is competitive on a global basis, with smaller markets continuing to demand product as their gross domestic product and incomes grow. While it was shy of the all-time record in March by 37 million lb., the cutout was $5 cheaper. Larger volumes always are able to move at cheaper prices. The cheaper prices are enough to motive the buyers, but the strong tariffs in place from China and Mexico certainly are taking a toll on total volumes. The fourth quarter is shaping up to be less than a 3% gain over 2017 while still being the strongest quarter of the year and the largest in U.S. history.

Poultry: According to USDA’s most recent “Weekly Young Chickens Slaughtered under Federal Inspection” report, a total of 165.5 million young chickens were harvested during the week ended Dec. 1, at an average of 6.3 lb. per chicken. This compares with just 124.07 million head during the week prior and 167.9 million, at an average of 6.21 lb., during the same week a year earlier. The main reason for the gain in average liveweights when compared with a year earlier continues to be declining harvest totals in the lower weight ranges. This week, just 32.8 million young chickens, or 20% of all young chickens harvested during the week, were harvested in the 4.25 lb. and down weight category. The weekly young chickens harvested in the 4.25 lb.-and-under weight category total for the week ended Dec. 1 was down from 39.18 million during the same processing week a year earlier. This category remains 8% behind the prior year harvest cumulatively.

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