Beef, Poultry & Pork Market Update

Beef: Last week, the weekly average USDA Choice boxed-beef cutout increased 1.5% from last week, but it was 6.1% lower than last year. Beef production dropped 6.8% (w/w), although it was 1.6% higher than a year ago. Year-to-date, beef production is still 0.9% (y/y) higher than last year, and the expectation is a 0.1% drop from last year for 2022. The U.S. Census has just released the May international trade data and it shows 1,187.6 million lbs. of beef products imported during the first five months of the year, with year-over-year growth coming in at 25.3%. The expectation is that the U.S. will import 3,515.0 million lbs. of beef in 2022, thus shipments will have to accelerate to a steep 332.5 million lbs./month if we are to meet USDA’s target. May imports of beef were 8.1% larger than last year (y/y) and 1.1% above what the U.S. imported in April (m/m). On the export side, from January to May, the U.S. exported 1,352.0 million lbs, which was 4.3% more than last year (y/y). The U.S. is projected to export 3,421.0 million lbs. in 2022, which means an average of 295.6 million lbs. per month for the remainder of the year. May exports were 8.5% higher than April (m/m) and 1.2% above May 2021 (y/y).

Chicken: Last week, the USDA National Whole Broiler/Fryer index declined 0.6% (w/w), but it is a remarkable 53.0% higher than a year ago. For the w/e July 2, weekly chickens slaughtered increased 2.4% (w/w) but was 0.2% below last year (y/y). The average bird weight increased 0.8% (y/y). Year-to-date, ready-to-cook chicken production as of July 2 was 1.5% more than 2021, slightly below the USDA’s 1.6% expected (y/y) gain for H1 2022. The USDA is forecasting H2 2022 domestic chicken production to be 0.3% larger (y/y). Data from the U.S. Census indicate that U.S. poultry meat exports shot up in May, a peak that is unusually high for this time of year and it was the second-biggest month in the last five years, representing an increase of 13.0% from April and 13.1% higher than May of last year. Year-to-date, U.S. poultry exports are running 5.8% larger than last year (y/y) and 9.5% above the five-year average. This is much stronger than the USDA’s expectation of a very modest increase of 0.4% (y/y) and begs the question of whether the USDA will revise their expectation higher in future reports. The strength of U.S. exports may be supporting prices and preventing some items, including chicken breasts from following their usual strong weakening pattern this time of year. Still, expect further seasonal softness for chicken breast prices and tender prices should peak soon.

Pork: Last week, the weekly USDA pork cutout was 4.6% higher (w/w), but 2.9% below last year (y/y). Pork production last week declined 13.7 (w/w) but was 6.2% higher than a year ago. Year-to-date, pork output is running 3.2% below a year ago, which is steeper than USDA’s projection of a 1.6% drop in production in 2022 (y/y). The recent weekly export sales report indicated that U.S. exports of pork meat, according to the volumes reported by the merchants, accelerated in June by 9.6% (m/m) and were 7.2% larger than a year ago. Still, the report indicates year-to-date that total pork exports are 20.1% below a year ago, which is a steeper decline than what the USDA expects. This year, Mexico has imported close to 45.9% of total U.S. exports. June exports to Mexico were 15.2% higher than May (m/m) and 18.4% above last year (y/y). The volume to China has declined significantly compared to last year: June exports to China were 31.6% below a year ago, but they did increase 2.7% from May (m/m). Pork exports to other countries also rose in June, by 6.2% (m/m) and were 16.8% larger than a year ago. Pork prices could remain supported for the rest of 2022 but still below 2021 levels.