Beef: Although some of the middle meats and fat trim held their ground, a weaker undertone in the end cuts and ribs pressured the blended cutout under $188/cwt. at week’s end on Feb. 10, about $3 under the prior week. While spot sales posted a modest rebound, larger volumes came at the expense of lower prices, which, coupled with higher cattle purchase costs and deteriorating margins, likely pared slaughter volumes at the end of the week. Further declines are likely heading into mid- to late winter, with weekly slaughter slipping into the range of 550,000-560,000 head, far below the late-January peak above 590,000. Following the larger feedlot placements last fall, however, fed cattle supplies will expand rapidly into the spring, with weekly kills regularly exceeding 600,000 head and averaging 5-7% above last year. The blended cutout may firm in the mid-$180s ahead of a seasonal advance back above $200 in the spring before trending lower again into the summer. Supported by tight supplies and lighter carcass weights, fed cattle prices may reach the low to mid-$120s.
Pork: Final 2016 numbers for pork exports were released last week. December exports exceeded 493 million lb., just shy of the December record of 494 million lb. set in 2011. Total pork exports for 2016 were 5.23 billion lb., also just shy of the record of 5.37 billion lb. While the December total did not set a record, between exports and domestic disappearance, the U.S. moved more than 26 billion lb. of pork -- an all-time record -- with exports accounting for 25% of pork disappearance. The U.S. moved 104.65% of the total pork produced domestically, leaving a record low in cold storage as a percentage of pork cleared. Without such a robust export program, this type of pork movement could not have happened.
Poultry: There has been a lot of concern lately with respect to the outlook for poultry trade, especially with bordering nations included in the North American Free Trade Agreement. The broiler industry is undoubtedly nervous; however, it is not yet clear whether that concern has entered trade decisions yet. All indications are that the industry continues a natural return to a healthy trade environment. The most recent U.S. Department of Agriculture trade data released for December showed that 612 million lb. of broiler meat were exported during December. This represents a 28% increase from the same month a year ago and the largest amount of broiler meat exported for December since 2010. Mexico again was the number-one destination for U.S. broiler meat, importing 122 million lb. and continuing to erode the surplus inventories of dark meat in the U.S. While the trade relationship hangs in the balance of decisions in Washington, D.C., a fair amount of optimism is making its way into the U.S. broiler market for 2017.
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