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FEEDSTUFFS MEAT PRICE OUTLOOK: Dec. 18, 2018

marina_karkalicheva/iStock/Thinkstock Pork carcasses hanging in cooler
Beef packers come in with another strong cattle harvest performance.

Beef: Cash cattle trade developed earlier Friday afternoon compared with the very late trade of the prior week. Live trade in the South was at $119/cwt., firmly with the top end of sales from the week before. Dressed trade in the North was reported at $188, a dollar higher than the upper end of two weeks ago. Early-week strength in the Choice cutout could not be sustained last week, with large drops in the primal rib value being accompanied by some weakness in the loins. This more than offset the strength in the end meats. The Choice cutout may hover around $210/cwt. or lower into the end of the year before gaining some strength in January back up toward $215. Although declining from the levels two weeks ago, packers came in with another strong cattle harvest performance this week, totaling 654,000 head. This was the largest for this particular week since 2010 and was down 13,000 from the prior week but 26,000 head larger than last year. Beef production, estimated at 542 million lb., was 1.9% smaller than last week but 3.6% larger than last year.

Pork: The cutout worked higher last week, but not to the extent of the prior week's gain. This year, going into the final holidays of the season, the festivities will encompass two weeks, which will mean two weeks of abbreviated harvest and additional employee vacation opportunities. The industry bought hard last week, preparing for tighter fresh supply the last two weeks of the year as well as reduced processing capabilities. This strong pull will not be the case this week, as ports slow down and domestic buying is finished for the year. Expect a price correction this week and possibly the week or two after that before the next seasonal price bottom is found. It will be a slow grind to get the cutout back to last week's highs, possibly five or six weeks.

Poultry: The most recent trade data issued by the U.S. Department of Agriculture's Economic Research Service showed that U.S. broiler exports reached nearly 670 million lb. during October, which was up 4.3% from a year ago. The October broiler export growth followed a 7.4% gain in export volume during the third quarter compared with the same period a year earlier. Imports of U.S. broiler meat have been encouraged by lower product values and supported by income growth in emerging economies. Mexico remains the top destination for U.S. broiler meat exports. During October, Mexico took 15% more U.S. broiler meat than a year ago, at a total of 132 million lb. It was the highest single-month export total for U.S. broiler meat to Mexico since July 2015. Additionally, Angola has served well as an emerging market for U.S. broiler meat exports. During October, U.S. broiler meat exports to Angola totaled 40.6 million lb., which was up nearly 58% from last year yet nearly 18% lower than the September total.

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