Beef, Poultry & Pork Market Update

Beef:

The CME February cattle contract, the nearest on the board, experienced a slight decline of 0.5 percent week-over-week, settling at $198.10 per cwt. Most other contracts saw a decrease of around 1 percent as beef packers reduced the harvest to lower cash cattle costs. Consequently, spot/cash cattle prices dropped by 1 percent to $203 per cwt. Steer carcass weights fell by 3 pounds to 1,439 pounds but remain 50 pounds heavier than last year. Weekly harvest totaled 561,000 head, down 3.9 percent week-over-week and 7.8 percent compared to last year. Beef production reached 489 million pounds, a decrease of 4.2 percent week-over-week. Despite the reduced harvest and beef production, both choice and select beef cutout values declined by 2 percent, reaching $312.62 per cwt and $303.18 per cwt, respectively.

Breaking down the choice cutout, the bone-in export rib dropped by another 8 percent to $8.28 per pound, while the boneless ribeye increased by 2 percent to $9.93 per pound. The loin complex showed mixed results last week. Choice shortloins fell by 7 percent to $6.90 per pound, choice striploins rose to $9.64 per pound, and choice top sirloins increased by 3 percent to $4.73 per pound. Choice tenderloins decreased by 2 percent to $12.32 per pound. Processors and retailers are building inventory positions in the loin subprimals in preparation for the spring grilling season. Over 334,000 pounds of choice shortloins traded out-front at $7.33 per pound, which was $0.03 per pound higher than the previous week's out-front trade.

The end cuts (chucks and rounds) experienced declines across segments. In the chuck segment, chuck rolls decreased by 3 percent to $3.84 per pound, and shoulder clods remained flat at $3.57 per pound last week. In the round complex, inside rounds fell by 1 percent to $3.64 per pound, and bottom round flats dropped by 3 percent to $3.57 per pound.

The ground beef and trim market saw mixed price movements last week. Ground beef 81% dropped by 18 percent to $2.71 per pound but sold out-front at $3.03 per pound. Fifty percent trim decreased by 2 percent to $1.10 per pound, while ninety percent lean trim remained flat at $3.74 per pound.

Looking ahead, the recent downturn in the live cattle and beef market aligns with typical end-of-February trends. However, core factors supporting higher prices persist, and upcoming spring promotions in foodservice and retail are expected to bolster the market.

Poultry:

The harvest of young chickens reached 169 million head, showing a slight decrease week-over-week but an increase of 2.6 percent compared to the same period last year. The average weight per bird dropped to 6.46 pounds, slightly higher than last year's 6.44 pounds. Despite the slight reduction in harvest, total production was 829.6 million pounds, down 1.2 percent from the previous week. Weekly broiler-type placements slightly decreased to 191.8 million head, but this figure is 3.5 percent higher than last year. Both placements and eggs set have increased year-over-year; however, hatchability remains below seasonal averages. Retail chicken promotions fell by 5.4 percent last week. Wholesale chicken prices also declined compared to the previous week, although prices for chicken breasts and the eggshell index rose again. In detail, the National Composite whole birds and WOGs decreased by $0.02 week-over-week to $1.26 per pound. In foodservice WOGs, the high-volume 2.5 to 3.5-pound WOGs dropped by $0.02 week-over-week to $1.24 per pound. The 2.5-pound and under category fell by $0.03 to $1.39 per pound, while the 3.5-pound and over category decreased by $0.09 to $0.99 per pound.

In the parts segment, white meat prices were mixed. Boneless/skinless breasts increased by $0.07 week-over-week to $1.66 per pound, while tenderloins decreased by $0.01 to $1.69 per pound. Retail promotions for white meat surged week-over-week, but retail prices also rose last week. Chicken wings remained flat at $1.91 per pound, while drumsticks fell by $0.02 to $0.46 per pound. Boneless/skinless thigh meat decreased by $0.01 to $1.33 per pound, and bone-in thighs dropped by $0.01 to $0.92 per pound. The USDA's large eggshell index increased by nearly 4 percent week-over-week.

Looking ahead, the egg market is not expected to improve soon due to ongoing Highly Pathogenic Avian Influenza (HPAI) outbreaks affecting egg-laying hens and the approaching Easter holiday, a peak demand period for eggs.

Pork:

CME hog futures and cash lean hogs showed mixed results last week. The CME April future, now the nearest contract on the board, declined by 6 percent to $88.52 per cwt, with other contracts also falling by 3-4 percent. However, spot/cash hogs increased by 5 percent to $90.20 per cwt. The hog harvest was slightly higher week-over-week at 2.54 million head, remaining flat compared to last year. Overall pork production totaled 553.6 million pounds. Despite the flat harvest and production, the pork cutout dropped by 7 percent to $94.03 per cwt, primarily due to a sharp decline in the belly primal.

Breaking down the primals and subprimals, the loin primal decreased by 3 percent week-over-week. Boneless pork loins rose by $0.02 to $1.42 per pound. Loin/baby back ribs saw a significant drop of $0.29 to $2.24 per pound, while tenderloins fell by $0.05 to $1.76 per pound. The pork butt primal remained flat at $107.10 per cwt, with bone-in pork up by $0.03 to $1.23 per pound and boneless pork butt up by $0.01 to $1.36 per pound.

According to the export/international sales report, 2.3 million pounds were sold the previous week, which should lead to higher prices in the near term. The rib primal increased by 1 percent last week to $148.65 per cwt, with medium spareribs up by $0.04 to $1.62 per pound. The ham primal finished 3 percent lower last week at $86.76 per cwt.

The belly and trim segments showed mixed results, with bellies experiencing a sharp decline as forecasted in our daily report earlier in the week. The belly primal dropped by 25 percent to $136.52 per cwt, with the subprimal derind 13/17 belly decreasing by $0.43 to $1.66 per pound. Despite this steep two-day drop, prices are expected to rebound moderately in the coming weeks.

In the trim segment, 42% trim decreased by $0.02 to $0.59 per pound, while 72% trim remained flat at $1.02 per pound.

Looking ahead, while the hog and pork market experienced a typical late-February pullback last week, anticipated increases in export sales, freezer restocking, and spring retail promotions are expected to drive the market upward.

Bacon:

The belly markets found volatility – with mixed averages and late week downward pressure this week:

The belly markets continued to find strength early in the 5-day pricing week this week, with volatility increasing mid-to-late week, and asymmetrical trading between the two (2) primary belly markets as the USDA PRIMAL finds more significant weakness late dominating the news in the category this week. The belly market averages this week reported near 165 (USDA PRIMAL) / 220 (USDA 9/13 DERIND) --- relatively flat for the USDA PRIAMAL and slightly up for the USDA 9/13 DERIND compared to last week’s averages near 165 (USDA PRIMAL) / 215 (USDA 9/13 DERIND). With the late weakness pulling markets down in the category, expectations are that the belly market has likely peaked and is expected to continue to experience downward pressure in the coming weeks. Looking ahead, look for the complex to find short-term mild to moderate downward pressure, followed by a period of limited upward or downward risk as markets are forecasted to follow the 5-year average – but maintain a premium to the average - for much of the remainder of Q1… through the first half of Q2.