CME: Cattle Slaughter Down & Hog Up from Last Week

Based on preliminary estimates, steer and heifer slaughter for the week was 492k head, 3.3% lower than the same period a year ago. Cow and bull slaughter for the week was estimated at 128k (without bulls cow slaughter was below 120k), down 4.5% from a year ago. So far the reductions in steer and heifer kills have done little to slow down the rampant inflation in cattle prices. Live steer prices for the week averaged around $129/cwt., almost a full percentage point over the previous week and some 15% over year ago levels. The reduction in slaughter has been offset in part by heavier weight cattle coming to market. Steer weights are running well above year ago levels, thanks to warmer than normal temperatures this winter. Dressed steer weights for the week ending February 18 (latest data available on this item) were quoted at 854 pounds per carcass, up 2.4% from a year ago.

Total cattle carcass weights for the week ending March 3 were 788 pounds (this includes both heifers and cows which are much smaller than steers), up 2.2% from a year ago. Overall beef production for the wee was 488.5 million pounds, 1.37% lower than the same week a year ago. Cow slaughter has been lower than a year ago in recent weeks and the supplies available for marketing are some of the tightest we have been in recent years.

Hog slaughter for the week was reported at 2.150 million head, 0.5% higher than the same week a year ago. Sow slaughter has been running below both year ago and five year average levels for much of this year and for the week ending February 18 (latest data) sow slaughter was 57.1k head, down 2.3% from a year ago. Producers have limited the number of sows they sent to market in part due to decent out-front implied profits but also because the trim market has provided limited opportunities in recent weeks. The price of 42CL and 72CL trim is currently some 15-20% below year ago levels and this has negatively impacted sow carcass values.

Overall beef, pork and poultry production for the week was reported to be 1.681 billion pounds, 34.8 million pounds or 2% below the same week a year ago. Cutbacks in chicken production remain the primary contributor to the decline in overall protein supplies. Total chicken production on a live weight basis was 845.6 million pounds, 5.8% lower than a year ago. On a ready to cook basis (which is the number we use to add up overall protein pounds) broiler production was 634.2 million pounds, 34.6 million pounds or 5.5% less than the same period a year ago. The cutbacks in chicken supply are finally starting to show up in the price of chicken breasts, which should show significant increases in the next four weeks.