Beef: With cattle seemingly harder to come by, packers followed through on cooler cleaning and lighter Saturday shifts this past week. Following the 650,000-head harvest of the prior week, the harvest last week posted just 635,000 head -- 17,000 head over last year and the smallest non-holiday harvest since late April. Informa Economics IEG has made out-front adjustments to Saturday slaughter schedules, removing 8,000-10,000 head per week over the next five weeks, leaving harvests in the range of 635,000-645,000 head per week into mid-August. With larger placements extending across the past couple of months, fed cattle slaughter may repeat the pattern from the back half of 2016 as well as 2017, with beef production increasing counter-seasonally from the third quarter into the fourth quarter. Weekly average cow slaughter was up 7.2% through June, averaging 116,000 head on a weekly basis, but is expected to reach a seasonal low in late July to early August before expanding into the fall, with the year-over-year differences narrowing into the fourth quarter.
Pork: As the picture for the supply of animals becomes clearer and clearer, the industry is realizing the profitability picture for the remainder of the year, given the production and export expectations. Industry growth for the last three years was intended for the export market and, up until a few months ago, was shaping up rather well. Many nations were taking record volumes of U.S. pork, with the additional packing capacity having already come on line to support it. The trade war that started several months ago, however, is changing the volume of pork product exported this year, leaving it to be absorbed by the domestic markets. For the last three weeks, hog values have been in decline, with the supply of animals up over last year by more than 3%. Declining values for the next 45 days should move profitable hogs into negative margin territory.
Poultry: Despite hatchability issues during May, broiler chicks hatched during the month were record large for any month, surpassing the previous record set in March 2008. The number of chicks hatched per layer in June is expected to be in the 14-head area, and the forecast of broiler chicks hatched during June is in the 826 million-head range, up 3% from 2017. Pullet placements 7-14 months averaged 0.3% behind the year-ago pace during the first half of 2018. For the third quarter, the metric is expected to be up 2% overall and to reach a 2.5% gain compared to the fourth quarter of 2017. The number of broiler chicks hatched per layer is expected to remain at or below year-ago levels for the remainder of 2018 and well below the five-year deviation.
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