U.S. pork exports still record large even with trade wars.

January 22, 2019

3 Min Read
FEEDSTUFFS MEAT PRICE OUTLOOK: Jan. 22, 2019

Beef: Cash cattle trade did not develop until late Friday afternoon last week and was mostly steady with the prior week. Winter weather may affect cattle performance and movement in the near term. The fed cattle market is expected to settle back into the very low $120s in the latter part of the first quarter before modest firming into the spring. Weakness in the early part of the week could not be offset by some modest strength late in the week, with the weekly averages showing modest declines. Choice ribs were lower, as were some of the round cuts. Chucks and briskets were barely steady to weak, while loin cuts were mostly steady. Packers will be working to stabilize cutouts in the very near term before seeing weakness once again in February. As expected, cattle harvest was a little smaller last week, with factors of packer margins and impending winter weather at play. Last week's total was estimated at 620,000 head, compared with 626,000 head in the previous week 613,000 head a year ago.

Pork: Pork export market growth looks like an exceptional feat given the current trade war status. However, the growth for 2019 is on par with the trend line of the past three years. Even with the trade wars of 2018, exports still proved record large, with nearly 6 billion lb. of pork leaving the U.S. If the trade wars can subside, then the growth is expected to continue, with the forecast for 2019 at 8% over 2018. If the trade disputes are not resolved, the risk is obviously to the downside of the forecast yet still is likely to exceed 2018 levels. This puts 2019 at an advantage to see record volumes again, unless the trade wars worsen and invite others to join in tariffs. Growth on par with 2018 will have the export markets participating at the upper levels of U.S. pork production. If strong growth can be realized in 2019, with the trade wars subsiding, the year is likely to put a new record in place for the percentage of domestic pork production leaving U.S. borders.

Poultry: As buyers prepare for Super Bowl and March Madness, calls for wings typically ramp up. Given the additional 28 million lb. of wings in cold storage at the end of November 2018 compared with a year earlier, as well as the decline in wing promotions and relatively flat supplies in fresh markets, it was expected that the result would be a much more muted rally into peak seasonal support. Over the last few weeks, however, spot market conditions have firmed slightly better than expected. Wing quotations reported by the U.S. Department of Agriculture surprised analysts this week as the weekly weighted average jumped more than 7 cents to $1.70/lb. The current momentum is expected to carry (albeit modestly) through the Super Bowl, which still is roughly two weeks away. However, at this juncture, the flow of chickens into marketing position during February and March should keep a lid on further advances, especially given the breadth of offerings inclusive of boneless wings.

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