Pork and beef cutout values declined this week as packers were forced to discount some product to get it moving.

Seasonal price performance tends to be different for pork and beef, generally driven by shifting consumer preferences during the hot months of the year but also due to the shift in overall volume of product coming to market.

On the demand side, consumers are not as keen to stay in the backyard and grill in a 95 degree day and this has a particularly negative impact on grinding beef values.

Ground beef still makes up over 40 per cent of all beef consumption in the US and slowing ground beef sales tend to be a drag on the entire complex. The price of 81CL coarse ground closed last night at $149/cwt, about 22 per cent lower than what it was trading back in May.

But seasonality in ground beef pricing is nothing new, it happens every year and this one is no different. What is troubling for beef demand in general and ground beef demand in particular is the fact that ground beef prices have declined at a faster pace than overall cattle carcass values.

The current 81CL value is about six per cent higher than a year ago compared to cattle carcasses that are running some 17 per cent ahead of last year.

Part of the reason that packers are able to pay more for cattle this year has to do with the ongoing strength in export markets. But this strength is also a vulnerability as export orders tend to be fickle.

For now Japan continues to drive US beef exports. In the last four reported weeks, shipments to this market have been running some 35 per cent ahead of last year and total beef exports for the last four weeks are up by a similar amount.

If there is one concern for the beef market is how cattle prices perform in Q4.

Current futures imply some very expensive prices for steak cuts going into the year end holidays and it remains to be seen whether the consumer is willing/able to pay those prices.

The pork cutout closed on Thursday at $99.73 and current values have been closely following the five year seasonal factor. Hot weather appears to be taking its toll on hogs coming to market and hog carcass weights, which were flying high this spring, have declined sharply.

The latest USDA man datory report showed carcass weights for hogs slaughtered on 7/20 at 199.07 lb. compared with 202.34 lb. a year ago, a 1.6 per cent decline.

The lighter carcasses have limited the amount of pork trim coming to market, with fat pork trim values currently running some 33 per cent higher than a year ago.