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Pork cutout perfectly on pace with seasonal descent.

Beef: After 639,000 head of cattle were slaughtered the week ending Aug. 25, last week slowed considerably, dropping well below expectations to 622,000 head. This week's holiday-reduced kill is expected to come in near 545,000 head, ahead of a rebound back towards the mid-630,000-head area, where slaughter schedules are expected to remain throughout the balance of September. A portion of this week's slowdown can likely be attributed to the disruptions left in the wake of Hurricane Harvey, but despite very favorable margins, packers do not seem motivated to slaughter cattle aggressively. Larger out-front commitments continue being made, especially in the 90-day-plus delivery window, but that does very little to shore up current supplies, and spot beef sales have been dwindling as of late. Cow slaughter is trending seasonally higher, from the 105,000- to 110,000-head range throughout the summer towards the 110,000- to 115,000-head range recently. Further seasonal increases towards the 120,000-head range are expected into November.

Pork: The cutout continued its decline, perfectly on pace with a seasonal descent, and is likely to continue declining for another week, in seasonal form. It is probable that the most aggressive moves are over, with any further weakening expected to be modest or even slight. As further losses in bellies minimize and other primals find support for the near term, the cutout is likely to now move relatively sideways for a few weeks, after which it is price-risk upward on a seasonal basis. This year, the cutout is not expected to move higher on a seasonal basis, as available hogs should allow for continued price easing, in addition to the increased packer capacity, which could lead to some discounted product changing hands.

Poultry: Turkey meat production numbers have become much more modest lately in comparison with a year ago. However, year-ago performance was making a strong comeback after sharp reductions in output related to highly pathogenic avian influenza outbreaks occurred during the same time a year earlier. The most recent U.S. Department of Agriculture "Poultry Slaughter" report put young turkeys slaughtered during July at 18.94 million head. That number was 3.3% lower than year ago and the second-lowest July total (higher only than 2015) in three decades. Slaughter weights are up nearly 1% year to date compared with a year ago, which has kept production from plunging even further. Production of young turkeys on a ready-to-cook basis during July totaled 464.9 million lb., 2.4% lower than year ago. The likely conclusion here is that the restricted poult placement that was revealed in the USDA "Turkey Hatchery" reports earlier this year in a response to higher holdover rates, struggling demand and floundering breast meat values is beginning to show up in production numbers.

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 [email protected] for more information.

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