Beef, Poultry & Pork Market Update

9/18/23

Highlights

Beef:

CME October live cattle futures were higher on the week at $183/cwt, up about 1% w/w. Spot live cattle traded at $184/ cwt in the Midwest and $179/cwt in the South. This is about $1 lower in both the Midwest and South. The choice cutout was down a touch w/w but still feels like it is softening and will trade lower in the next few weeks. The primal and subprimals were flat to lower w/w but the rib and round primals were a touch higher. Last week, the end cuts were mixed, and until the weather cools down, it will be difficult to see prices go higher. The rib primal was higher by 1.1% w/w, driven again by the boneless ribeye that traded higher by about .05/lb, with the bone-in export rib lower by .10/lb. We still see some weakness in pricing developing in late September or early October but should be minimal as holiday ribs will attract buyers. The loin primal was down 2% w/w, and the subprimals were mostly lower across the board. Some substantial strip volume was not enough to keep the shortloin and striploin from moving lower w/w. The tenderloins, which will also soon see the holiday buying push from the food-service sector, still traded very sloppy on the week. Beef trim 50s rallied higher late last week.

Poultry:

Last week’s poultry harvest/production was higher again w/w. Young chicken harvest was 171,000,000 million, which was a 1% increase from last week with the average weight at harvest down a bit to 6.32 LBS, which was about flat w/w. However, the increase in production didn’t slow down pricing as most chicken parts were higher w/w. The USDA national composite whole chickens were only up .3% w/w to $1.15/lb. Chicken parts were all higher last week, with breasts, tenderloins, and wings all higher by 5%, but the B/I legs had the largest percentage gain at almost 8%. After moving higher 8% the prior week, breast B/S continued its upward trajectory to close another 5.6% higher w/w. The trading volume for breasts was lower than the prior week. The tenderloins continued gaining strength again last week and traded up another 4.5% w/w at an average price of $2.25/lb. With the price gains the past few weeks, the tenderloin is up 15% m/m. The egg complex was mixed, but large eggs were higher by 12.5% w/w, with liquid eggs lower by 8% last week. Chicken tenderloins, breasts, and wings continue to be the story in the poultry market. The gains slowed last week. Looking at retail/grocery features, while not as strong as the holiday weekend, it’s still drawing interest as a value alternative to beef.

Pork:

CME lean hog futures (Oct 23) were down about 1% w/w to $82.82/cwt. Cash spot hogs were down 6.5% w/w to $86.01/ cwt. After rallying higher to start the week, the pork cutout finished up about 3% w/w and is now lower by 13% lower m/m. The cutout traded a lot higher earlier in the week, but some downward pressure on Thursday was noted with some large volume in the ham and belly primal limiting the upside. The belly is a bit perplexing with big swings higher one day, followed by huge drops lower the very next. As an example, it traded from $113/cwt to a high of $131/cwt and finished lower than the start of the week at $109/cwt! The ham primal also saw some volatile price movements during the week. Although it was up 5% w/w, it had traded a lot higher. The subprimal 23-27 ham finished up almost 7% w/w. In last week’s report, we noted some support in the ham for holiday preparations and export sales, and that looks like what happened. The US Meat Export Federation published the export sales data for July that showed pork exports up 5% y/y, and up 13% over the past seven months. With some of the rally higher in various pork primals this month, we should expect similar results in the August data release.

Bacon:

The markets found resistance to continued downward pressure, although still maintaining weakness across the category this week. The belly market(s) were mixed – with the market trend of significant downward pressures / momentum easing (as forecasted) this week. The USDA PRIMAL found strength for the first time in the last 5 weeks (albeit marginally) vs. last week, and the USDA 9-13 DERIND exhibited minor / mild weakness for the week. Market expectations remain unchanged, with the market forecasted with mild to marginal weakness through the rest of September. With the market(s) currently at 125 (USDA PRIMAL) / 145 (USDA 9/13 DERIND) and forecasted to trend down to 105 (USDA PRIMAL) / 125 (USDA 9/13 DERIND) by the first week of October. Look for the possibility of mixed markets over the next couple of weeks, but with the dominant theme in the market to maintain mild market weakness and modest downward pressure for the next 3-4 weeks. Looking ahead to October, markets are expected to attempt to add mild to moderate strength, however experts see the outlook as modest at best upward risk with the market more likely to add slight gains up to 115 (USDA PRIMAL) / 135 (USDA 9/13 DERIND) through late October – then return to moderate downward pricing risk for November.

Chicken

Boneless Thigh, B/S Breasts, Jumbo Wings, Drumsticks and Tenders up. Leg ¼’s, WOGS, BI Thighs and B/I Breasts down.

Pork

Loins and Cushion up. Hams, Butts, and Spareribs, Bellies, Tenderloins, Lean trim, Picnic, Fat trim and Back Ribs up.

Beef subprimals USDA Choice for delivery week of 9/25/23

Loins

Striploins down. Tenderloins and Top Sirloins up.

Chucks & Rounds

Chuck Roll, Shoulder Clod Heart, Shoulder Tenders, Top Rounds and Bottom Round Flats up.

Thin Meats

Tri Tips, Flap Meat and Briskets down. Outside Skirt, Flank steak and Ball Tips up.

Ribs

Down.

Ground Beef

Down.