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FEEDSTUFFS MEAT PRICE OUTLOOK: Feb. 12, 2019

U.S. trade system still healthy despite tariff wars with Mexico and China.

Beef: Very late last Friday afternoon, a small amount of cattle began to trade in the South at $125/cwt. live, up $1 from the prior week. A small to modest trade had developed earlier in the day in the North at $200 dressed, also $1 higher than a week ago. Cutout values were stronger through midweek before dropping back in late-week trade, with weekly averages similar to the previous week. Firmness in the ribs was offset by modest weakening in the chuck, rib and brisket primals. The spot market load count on Choice and Select boxed beef cuts was the smallest since the holidays. The biggest declines in volumes were seen across the chuck rolls, briskets, 109E bone-in rib-eyes, inside rounds, outside flats and flap meat, while there were gains on tenderloins, light boneless rib-eyes and short loins. Last week's cattle harvest bounced back from the weather-affected levels of the week before, reaching 614,000 head. This was 21,000 head larger than the prior week and 25,000 head above a year ago.

Pork: Export numbers finally were released for November 2018 after the partial government shutdown delayed the release of the reports. The U.S. exported 513.5 million lb., which was 4% below the prior year. While it falls short of a record for the month, it is still the second-largest November total in history and fell shy of the record by the same 4%. The reduction in exports is easily explained by the tariffs Mexico and China have in place against U.S. pork. The favorable pricing structure has provided an excellent opportunity for all trade partners to benefit, with interest still there for U.S. pork at these historic low prices. December and January numbers are not known yet, but the trade system is still healthy despite the trade war with two specific players. Last year is expected to come in around 5.85 billion lb., a modest increase of roughly 4%.

Poultry: On Feb. 1, the U.S. Department of Agriculture released backlogged poultry production data that originally had been set to be released just days after the partial government shutdown started. The latest “Poultry Slaughter” report released highlighted young chicken slaughter at a total of 728.2 million head, averaging 6.29 lb. for November. In addition, the October young chicken harvest was revised nearly 2 million head higher, which added 20 million lb. to the initial estimates for October ready-to-cook (RTC) production volume. Ultimately, production of broiler meat came in at nearly 3.45 billion lb. on an RTC basis during November, a 0.3% increase compared with the same month a year earlier. Given the margin compression that arose for broiler integrators during the second half of the year, it would not be surprising for December production totals to be reported below expectations as well, as the weaker price environment that remained detrimental to broiler production growth during October and November continued through December.

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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