CME: Recent Weeks See Pork Production Increasing at Faster Pace

US - Solid meat protein demand was the general theme for livestock markets this past spring and summer and the trend has continued into early fall, reports Steiner Consulting Group, DLR Division, Inc.
calendar icon 16 October 2017
clock icon 4 minute read

Total cattle slaughter last week was 622,000 head, down about 10,000 head from a week ago but still as much as 3.6 per cent higher than the previous year. We don’t have the final USDA numbers on fed and non-fed slaughter but expect fed slaughter for the week at 498,000 head, 3.6 per cent higher than a year ago.

Fed slaughter has exceeded year ago levels for all of this year and this is likely to continue in the coming months. On feed supplies continue to increase and higher placements in August and likely September should continue to bolster supplies through much of next year.

However, some of the increase in slaughter has been offset by lower carcass weights. Beef packers have been able to easily market beef both into domestic and export channels, which in turn has allowed feedlots to remain current.

Steer and heifer carcass weights are reported with a two week lag but the data reported for week ending 30 September shows steer weights averaged 894 pounds/carcass, 15 pounds (-1.7 per cent) less than a year ago.

The average heifer carcass was 821 pounds, 1.3 per cent less than last year. So even as slaughter runs well above last year, total beef production for this latest week (10/14) is just 1.6 per cent higher than a year ago.

Fed cattle prices gained 1.5 per cent compared to the previous week and they are now almost 14 per cent higher than a year ago. Last year prices collapsed into the fall but it appears that now product markets have adjusted to the larger supply availability.

For several years, end users adjusted their merchandising in order to deal with an ever shrinking beef supply. Now that supplies have started to consistently increase, feature activity has increased and the consumer is once again starting to incorporate more beef in their weekly purchasing decisions.

The choice beef cutout is currently up 8 per cent compared to a year ago. Prices for end cuts are higher than a year ago but the increase has been in single digits. On the other hand, the value of ribeyes, which last spring hit all time record highs, once again is running well ahead of last year.

Seasonally rib prices spike in late November and early December on strong rib roast demand for holiday parties. Higher rib prices could once again lift fed cattle values into December.

Pork production has increased at an even faster pace in recent weeks and yet the pork cutout is only $2/cwt lower than four weeks ago. The average value of the pork cutout for week ending 14 October (see bottom of this page) was $73.8/cwt, 1.4 per cent higher than last year.

Pork production for the week was up over 9 per cent compared to a year ago. Keep in mind that last year pork production in North Carolina was significantly disrupted by Hurricane Mathew, skewing the y/y comparison.

Weekly hog slaughter since the first week of September is up around 4.4 per cent compared to the same period a year ago and in line with the inventory data reported in the USDA Hogs and Pigs report.

The key to the improvement in the cutout has been the value of hams, which is a key export item into Mexico and a staple for Christmas dinner. The average ham primal value this past week was $64.4/cwt, almost 26 per cent higher than a year ago.

© 2000 - 2023 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.