Beef, Poultry & Pork Market Update

Beef:

All the cattle contracts through the end of the year were flat w/w with October closing at $177.40/cwt. The choice cutout was higher by 1% for the week at $311.51/cwt, with some over-sold subprimals helping to support it. Breaking out the choice cutout, the bone-in export ribs were up another 2% to $9.15/lb and have been creeping up toward the out-front sales price of $9.26/lb. The boneless ribeyes were 4% higher, breaking above the $10.00/lb mark to $10.21/lb. The loin complex was mixed last week with boneless striploins higher by 4% to $6.79/lb and bone-in shortloins were down 5% at $6.17/lb. The end cuts (chucks and rounds) were also mixed, as chuck rolls were up another 5% to $4.35/lb, but clods were down 1% last week. In the round complex, insides were down 2%, and bottom round flats were up 1% w/w. The grinds likely hit their peak last week and should head lower now. Ground beef 81% was down 5% to $3.26/lb. In the trim segment, 50% trim was down 7% w/w to $1.35/lb, and 90% lean trim was flat at $3.76/lb. Similar to last week, the outlook for cattle and the beef cutout appears weaker as the market braces for a dip in demand. However, we can expect an increase in purchases of ribs and tenderloins as processors and retailers begin preparing for the end-of-year holiday season, and chuck rolls look higher heading into the fall/winter.

Poultry:

Last week, USDA young chicken harvest was 171.3 million head, which was up 2.3% w/w and flat compared to last year when the harvest was 171.0 million head. Breaking out the segment, the National Composite whole birds and WOGs were down 1 w/w at $1.22/lb. Looking at the parts, in the white meat segment, boneless/skinless breasts were up 2% w/w to $1.97/lb, as retail advertisements were higher and cheaper compared to the prior week. Tenderloins were flat again for the third week in a row at $2.52/lb, with retail promotions just slightly higher w/w. Chicken wings were slightly higher for the first time in several weeks as they finished up 1.2% w/w to $2.35/lb. Drumsticks were flat w/w at $0.45/lb. Boneless/skinless thigh meat was up 1% w/w at $1.88/lb, but B/I thighs were down 3.7% to $1.05/lb. The USDA’s large eggshell index increased another 7% w/w and is now higher by 58% m/m. The turkey market gave back all the prior week’s gain as whole turkeys were down 16% and turkey breasts were lower by 15 w/w. Looking ahead, retail and food service demand is expected to rise after the holiday as consumers, facing tight budgets, turn to more affordable options.

Pork:

Last week, lean hog futures were mixed to slightly lower, with the October contract down 1% to $80.70/cwt. The pork cutout ended lower by 1% at $94.87/cwt, with the largest declines in the ham and belly primals. Breaking out the primals and subprimals, the loin primal was flat w/w, but the boneless pork loin was up $0.01 to $1.46/lb. The subprimal baby back ribs were down 1% to $2.22/lb, and the tenderloin was lower by 2% w/w. The pork butt primal was down 1% w/w with the subprimal B/I pork butt up 1% at $1.18/lb, and the boneless pork butt flat w/w at $1.34/lb. The rib primal moved higher by 1% last week to $130.29/cwt as the medium spareribs were flat at $1.39/lb. The belly and ham primals were lower last week with the trim segment mixed. The belly was down 4% and the derind 13/17 belly declined 3% to $1.45/lb. The ham primal gave back 2% last week, trading down to $88.10/cwt. In the trim segment, pork trim 42% trim was up 8% to $0.73/lb, but 72% trim was down 5% to $0.87/lb. Looking ahead, similar to last week, we don’t expect much improvement in the pork segment. If the harvest continues to exceed seasonal expectations, the market is likely to decline further. Currently, the pork market is sluggish, struggling with increased harvest levels and stagnant international sales.

Bacon:

THE MARKETS EXPECTED TO STRENGTHEN FOLLOWING LAST WEEK, BUT FAILED TO MAINTAIN UPWARD RISK POTENTIAL AND FINISHING WITH SIGNIFANT WEAKNESS THIS WEEK:

Belly markets this week traded with mostly steady markets across the 5-day pricing week… however failed to maintain strength the market exhibited from the week prior. The market started the week at 120 (USDA PRIMAL) / 147 (USDA 9/13 DERIND) … and finished the week at 122 (USDA PRIMAL) / 148 (USDA 9/13 DERIND) … overall representing limited change or volatility during the week. This week averaged near 121 (USDA PRIMAL) / 148 (USDA 9/13 DERIND), down from last week with 127 (USDA PRIMAL) / 163 (USDA 9/13 DERIND) … resulting in a moderate to significant price decrease for the week in the belly complex and bacon category. Looking ahead, the forward outlook calls for limited downward pressure over the coming couple of weeks, and a relatively flat market is anticipated over this term. Entering October mild strength and potential upward risk in the market are projected, but not expected to climb much above the 135 (USDA PRIMAL) / 170 (USDA 9/13 DERIND) level by the week of Columbus Day. Markets are likely to return to downward pressure for the 2^nd half of October, and through the remainder of Q4, with LOWs anticipated to drive belly values down below 100 (USDA PRIMAL) / 125 (USDA 9/13 DERIND) as we approach late December.