Beef, Poultry & Pork Market Update

Beef:

The CME JUN cattle contract, now the nearest on the board, increased by 2.5 percent to $214.25 per hundredweight (cwt), with other futures contracts trading 2-3 percent higher. Spot/cash cattle prices also rose to $224/cwt as of Thursday night’s close.

Total beef cattle harvest increased slightly by 0.7 percent to 559,000 head, a week-over-week (w/w) rise of 9,000 head, though it was down by 10 percent compared to last year. Beef packers are limiting the harvest to lower the cost of cash/spot cattle. Steer carcass weights increased by 1 pound to 1,436 pounds, which is 35 pounds heavier than last year. Beef production rose to 489 million pounds.

Both the choice and select beef cutout values were higher as of Thursday night, with the choice cutout closing up 1 percent to $347.89/cwt and the select cutout rising by 3 percent to $333.20/cwt. Breaking down the choice cutout, the bone-in export rib remained flat at $11.12 per pound, while the boneless ribeye decreased by 1 percent to $13.27 per pound. The loin complex showed mixed results: choice shortloins increased by 2 percent to $9.42 per pound, choice striploins remained flat at $10.52 per pound, choice top sirloins rose by 3 percent to $6.37 per pound, and choice tenderloins decreased by 3 percent to $13.27 per pound. Notably, choice top sirloin XT reached another all-time high.

End cuts, including chucks and rounds, experienced mixed results across the segments. In the chuck segment, chuck rolls increased to $3.74 per pound, and shoulder clods rose by 5 percent to $3.45 per pound last week. In the round complex, inside rounds decreased by 2 percent to $3.61 per pound, while bottom round flats increased by 2 percent to $3.49 per pound.

The ground beef and trim markets also showed mixed results. Ground beef 81% increased by 3 percent to $3.31 per pound. Within the trim segment, 50% trim dropped by 7 percent to $1.11 per pound, while 90% lean trim decreased to $3.75 per pound.

Looking ahead, beef packers are facing increasing pressure as cash cattle prices rise. The harvest rate has significantly decreased compared to last year, resulting in substantial margin losses for packers. This trend of reduced harvests is likely to continue over the next week or two, which is expected to further bolster beef prices.

Poultry:

The USDA reported that the young chicken harvest reached 165.5 million head, which was slightly higher by 0.5 percent week-over-week (w/w) and 1 percent higher compared to the same week last year. The average weight per bird increased slightly to 6.58 pounds, compared to 6.49 pounds last year. With the slight increase in harvest, overall production rose by 1.7 percent w/w to 827.4 million pounds.

Weekly broiler-type placements rose slightly to 191.2 million head, although this is 0.6 percent lower than last year but still well above historical averages. Hatchability increased by 0.3 percent w/w but remains below seasonal averages at 76.9 percent.

Wholesale chicken prices were mixed last week, with the most significant gains seen in tenderloins and boneless thigh meat, while wings showed weakness. Overall retail advertisements increased by 6 percent w/w.

Breaking down the segment, the National Composite whole birds and WOGs (without giblets) decreased by $0.01 to $1.35 per pound. In the foodservice sector, high-volume 2.5# to 3.5# WOGs increased by $0.01 to $1.35 per pound, while the 2.5dn category decreased by $0.01 to $1.45 per pound. The 3.5up category increased by $0.02 to $1.26 per pound.

In the parts segment, white meat prices were mixed last week. Boneless/skinless breasts decreased by $0.01 w/w to $2.75 per pound, while tenderloins increased by $0.03 to $2.24 per pound. Year-over-year (y/y), breasts are up 56 percent, and tenderloins are higher by 5 percent. Chicken wings decreased by another $0.08 to $1.25 per pound, and drumsticks remained flat at $0.46 per pound. Wings are now down 45 percent y/y. Boneless/skinless thigh meat increased again by $0.10 to $2.31 per pound, while bone-in thighs remained flat at $0.88 per pound.

In the turkey segment, boneless breasts decreased by 2 percent, while bone-in whole turkeys dropped by 16 percent. The USDA's large eggshell index remained flat w/w as retail and foodservice demand is light.

Looking ahead, chicken prices appear to have found support at current levels. Demand for white meat is expected to remain steady as a cost-effective protein. This stability is driven by constrained harvests coupled with consistent demand from both retail and foodservice sectors heading into summer.

Pork:

Last week, CME hog futures and cash lean hogs showed mixed results. The CME MAY future, which is the nearest contract on the board, decreased by almost 2 percent to $90.65 per hundredweight (cwt), while most other contract months increased by about 1 percent. Spot/cash hogs, however, rose by 2 percent to $90.15/cwt as of Thursday night’s close.

The hog harvest increased by 2.3 percent to 2.48 million head, leading to a rise in overall pork production to 539 million pounds. The USDA reported the second lowest week for international pork sales, which contributed to a 2 percent decrease in the pork cutout to $94.50/cwt as of Thursday’s close.

Breaking down the primals and subprimals, the loin primal fell by 2 percent week-over-week (w/w). The price of boneless pork loins increased by $0.03 to $1.33 per pound, while loin/baby back ribs decreased to $2.87 per pound, and tenderloins rose by $0.10 to $1.77 per pound. The pork butt primal increased by 4 percent to $110.97/cwt, with the subprimal bone-in pork rising by $0.08 to $1.28 per pound, and the boneless pork butt increasing by $0.05 to $1.39 per pound.

Export sales for pork butts dropped back to 1.8 million pounds last week, well below the average weekly trading volume. The rib primal decreased slightly to $137.91/cwt, while medium spareribs increased by $0.01 to $1.49 per pound. The belly and trim segments saw significant declines, dragging down the overall cutout. The belly primal fell by 6 percent to $146.49/cwt, with the subprimal derind 13/17 belly decreasing by $0.09 to $1.79 per pound. The trim segment was sharply lower, with 42% trim down by $0.18 to $0.60 per pound, and 72% trim down by $0.02 to $1.00 per pound.

Looking ahead, the pork cutout market faces significant risks from tariffs and retaliatory measures. With generally lower international sales and a near halt in sales to China, the fact that almost 30 percent of U.S. pork production is exported could result in cheaper prices for consumers within the U.S.

The trim segment showed mixed results: 42% trim remained flat at $0.77 per pound, while 72% trim decreased by $0.02 to $1.02 per pound.

Looking ahead, tariffs and retaliatory measures pose significant risks to the pork cutout market. International sales are mixed, with sales to China essentially halted. Since nearly 30 percent of total U.S. pork production is sold through international channels, these actions could potentially lead to lower prices for U.S. consumers.

Bacon:

THE BELLY MARKET FIND SIGNIFICANT VOLATILITY IN THE 9/13 DERIND BELLY – AND RELATIVE FLAT PERFORMANCE IN THE PRIMAL BELLY THIS WEEK:

The belly markets on the average are relatively unchanged – or flat to week prior. This was exemplified by the USDA PRIMAL belly steady market performance across the 5-day pricing week, with daily market closes within 2-3 point up/down of this week’s average near 152. The USDA 9/13 DERIND belly market, in contrast, found more significant volatility with the single day HIGH reporting above 220, and the single day LOW reporting near 185… for an average this week relatively unchanged to prior week at 197. The recent strength in the belly complex – up ~40 cents over the last 3 weeks – is expected to be short lived as production is anticipated to be strong through May… and historically demand in the category is relatively soft / low in May through mid-June. This week’s market values were near 150 (USDA PRIMAL) / 195 (USDA 9/13 DERIND), holding mostly flat to week prior levels. Many in the industry are anticipating the market to pull back, or even experience a “correction” in the coming week(s), with some projecting the category to fall to levels near 135 (USDA PRIMAL) / 165 (USDA 9/13 DERIND) leading up to the Memorial Day holiday… while others believe supply is tight and demand relatively strong – believing that the market is more likely to hold value with the potential for market to push higher to 160 (USDA PRIMAL) / 200+ (USDA 9/13 DERIND). With this mixed forward outlook, it is hard to call the short-term for the category other than to expect continued volatility across the complex with the possibility for upward and downward risk in the coming weeks. Looking further out, increasing upward risk heading into the back half of June, with current expectations for the market to find dominant and significant strength that is expected to drive values up through July and into August. Similar to the short-term outlook, the summer outlook does not have total clarity to how high it could go at the peak, although the overall the consensus calls for increased strength leading to an August market HIGH.