raw meat cuts Photology1971/iStock/Thinkstock


Falling pork cutout expected to help packer margins.

Beef: Carcass weights continued declining heading into February, exhibiting a fairly normal downward slope. The mid-January winter weather that hit the heart of the northern Plains feeding country appears to have done little to exacerbate the decline, with the weighted average fed cattle carcass weight down 2 lb. from the prior week but 4 lb. over a year ago. From the fall high to summer low, last year's difference was 84 lb., which compares to a more expected 50 lb. decline. Currentness and aggressively pulling cattle ahead led to last year's steep declines, and although this year appears to be relatively tight at the moment, declines of that magnitude are not in the forecast for 2018. Deeper into the spring, weights are expected to run near 10-12 lb. over last year before increasing into the summer months.

Pork: The pork cutout's decline last week on account of bellies and hams certainly will help packer margins and may begin to curtail the downward pressure on hog prices sooner than expected. Since this price retreat was not expected, with bellies and hams finding support, the cutout is at risk to go back up from other primals beginning with the in-demand season shortly. Expect choppy behavior for the next four to six weeks, and then normal, seasonal demand should take over. Because this price is far below expectations for this time, the next successive price movements could be swifter than normal as there already seems to be renewed interest. The cutout should be moving higher, on average, but the total price risk is not significant, and the premium under last year should, on average, be maintained.

Poultry: The U.S. Department of Agriculture's most recent “Weekly Young Chickens Slaughtered under Federal Inspection” report showed that a total of 162.8 million young chickens were harvested at an average of 6.12 lb. during the week ended Feb. 10. The weekly total was up 0.4%, but the six-week slaughter total is down 2.1% from the same week a year earlier. It is slightly surprising that slaughter rates are not currently exceeding prior-year levels, given that the amount of broiler chicks placed in supply flocks was up 2.6% from the year before during the five to eight weeks prior to the most recent weekly poultry slaughter report. However, weather complications and other disruptions within the supply chain and reporting arena may be negatively affecting the data comparisons. The deficit in weekly slaughter totals is mainly showing up in birds in the 4.25 lb. and under category as well as the 6.26-7.75 lb. weight class, with strong growth in the 4.26-6.25 lb. weight class.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.