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moodboard/Thinkstock raw chicken
U.S. broiler sector picture improves as disappearance remains steady.

Beef: Once again, the cash cattle trade did not really get going until late last Friday afternoon, although there were a few sales earlier in the week at steady to weaker prices than the prior week. Trade developed in the South at the end of the week at mostly $125/cwt. live -- steady with a week ago. Dressed trade in the North, at $200, also was steady with the bulk of the prior week’s sales. The weekly averages on cutout values only were slightly lower than last week, keeping them near a steady state over the last four weeks while still above year-ago levels. Gains in the rib, round and brisket primals offset most of the weakness in the chuck and loin primals. Spot market volumes edged upward on several cuts from last week's rather modest tonnage. As expected, cattle harvest dropped lower last week, falling to an estimated 596,000 head. This compared with 620,000 head in the previous week but was still above last year's 589,000 head. Weekly cattle slaughter is expected to remain below 600,000 head over the next couple of weeks.

Pork: A pork belly production increase this July is expected to exceed the prior year by more than 7%, based on holiday and calendar schedules. Even with strong disappearance, a shortage of bellies should not be an issue due to ample preparedness, save for one major factor. That major factor to be considered is June, with production expectations above the prior year by 6%, while disappearance could be higher than July, creating a wider gap of disappearance over production. This will take a strong reliance upon what is in cold storage to make up for the shortfall starting in June, which could put an additional strain on July's stocks. Stock building programs are usually completed in April and are drawn down starting in May. With ample preparedness, a belly shortage should not be an issue for July, but clearance discussions need to happen regarding June's levels.

Poultry: During the first quarter of 2018, U.S. broiler meat exports were sluggish, retaining a pattern that occurred in 2017. By midyear, however, declining leg quarter values, as well as a strengthening global economy and a more favorable exchange rate, had contributed to a return to progressively higher U.S. broiler meat exports. During the third quarter of 2018, U.S. broiler exports were up 7.8% compared with a year earlier. October represented a strong month as well, with broiler exports at 670 million lb., which was up 4.3% from the same month a year earlier. The recently released November export totals represented an 8.2% increase from a year earlier, at a total of 622 million lb. It was the strongest November export total since 2013. A slightly stronger Mexican peso was supportive to U.S. broiler meat disappearance, as were strengthening oil prices last fall. Nearby, weaker oil revenues are likely to be less supportive to U.S. broiler meat exports, although leg quarters have remained dampened, promoting disappearance.

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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