Beef, Poultry & Pork Market Update

Beef:

The CME December cattle contract, which is now the nearest on the board, was up slightly to $185.83/cwt. Spot/cash cattle were also flat at $190/cwt. Steer carcass weights keep increasing and were higher by another 5# at 1,421 LBS and now 39# heavier than last year. Looking at the chart, harvest was lower by 1.3 percent w/w at 615K and down by 3.5 percent compared to the prior year when the harvest was 637K. With the lower harvest and but heavier cattle weights, beef production was flat w/w. The waning interest in beef as we approach Thanksgiving led to a lower cutout, as the choice finished down by 3 percent to $309.46/cwt while select dropped 2 percent to $279.72/cwt. The choice primals and subprimals were mostly lower last week, but the rib and loin segments were slightly higher. Breaking out the choice cutout, the bone-in export rib was down 1 percent to $11.11/lb, but the boneless ribeyes were up another 3 percent to $13.20/lb. The loin complex was flat to a touch higher last week. Choice striploins were up by 1 percent to $7.97/lb, and shortloins were up to $7.95/lb. Based on the boneless ribeye and shortloin values, the choice strips should trade north of $8.50/lb soon. Choice tenderloins were up 2 percent and closed at $15.66/lb while top sirloins rose 4 percent to $3.90/lb. The end cuts (chucks and rounds) were down sharply as they led the overall decline in beef prices last week. Chuck rolls were down 30 percent to $4.02/lb, and shoulder clods were lower by 1 percent to $3.24/lb. In the round complex, insides rounds were down 2 percent to $3.22/lb, and bottom rounds were flat at $3.61/lb. As forecasted the prior week, ground beef 81% was sharply lower after Halloween, dropping 15 percent to $2.55/lb. In the trim segment, the price of 50% trim has been volatile, settling at $0.73/lb, and 90% lean trim was down 3 percent to $3.41/lb. Looking ahead, look for the cutout to trend lower as November will be highlighted around Thanksgiving, but interest in ribs, striploins, and tenderloins to be strong.

Poultry:

USDA young chicken harvest was down 1.1 percent w/w at 167.5 million head, and down compared to last year when the harvest was 169.5 million head. The individual bird harvest weight was higher to 6.68#/bird w/w and compared with last year when they weighed 6.60#/bird. With the slight drop in harvest y/y but slightly larger bird size, overall production was flat compared to last year. The chicken complex was weak again last week but is finding some support at these new lower levels. Breaking out the segment, the National Composite whole birds and WOGs were flat w/w at $1.28/lb and were higher by 1 percent m/m. Breaking out the foodservice WOGs, the heavily purchased 2.5# to 3.5# WOG were down $0.03 w/w at $1.23/lb. The 2.5dn were down $0.01 at $1.36/lb, but the 3.5# were higher by $0.01 at $1.11/lb. Looking at the parts, in the white meat segment, boneless/skinless breasts were flat w/w at $1.48/lb but have dropped by 12 percent this month. Tenderloins were down by 2.2 percent w/w to $1.69/lb and 24 percent this month. Breast saw an increase in retail advertisements last week, and lower prices at the butcher counter. Chicken wings were down 2 percent w/w at $1.91/lb and nearly 15 percent m/m, but the declines look to be moderating near these levels. Drumsticks were down $0.01 w/w to $0.47/lb. Boneless/skinless thigh meat had its largest weekly decline this year dropping 5 percent to $1.70/lb, while the B/I thighs were flat at $0.95/lb. The USDA’s large eggshell index was higher by 35 percent w/w and finished up over 60 percent in the past two weeks. The turkey segment was higher last week with whole turkeys up nearly 6 percent w/w and breast higher by 5 percent last week. Looking ahead, chicken promotions will continue to be soft as the market focuses on the turkey segment for Thanksgiving

Pork:

Last week, the hog futures and cash lean hogs were mixed. The CME DEC future is now the nearest contract on the board, and finished down 3 percent to $81.20/cwt, while spot/cash hogs increased almost 5 percent to $89.78/cwt. Looking at the graph, the hog harvest was up w/w at 2.65 million head but down 0.5 percent compared to last year. Overall pork production was higher by 2.4 percent last week to 565.9 million pounds. The pork cutout traded lower by 5 percent to $97.98/cwt, with declines in most of the primals and subprimals, with only the rib trading higher. Breaking out the primals and subprimals, the loin primal was down 3 percent w/w. The price of boneless pork loin was down to $1.41/lb. The loin/baby back ribs were flat at $2.25/lb, while the tenderloin were down to $1.70/lb. The pork butt primal was lower by 1 percent w/w with the subprimal B/I pork butt down $0.03 to $1.18/lb and the boneless pork butt lower by $0.02 at $1.33/lb. The rib primal was up 2 percent last week as the medium spareribs traded higher by $.06 or 3 percent to $1.76/lb. The belly primal finally traded lower as it was down 10 percent to $154.18/cwt, with the subprimal derind 13/17 belly down to $1.86/lb after reaching the yearly high the prior week. The ham primal was also down 7 percent last week at $88.05/cwt as sales volume around the holidays is completed and led to the decrease. The trim segment was a lot lower again last week. Pork trim 42% trim was down sharply by 15 percent to $0.58/lb, but 72% trim only dropped 1 percent to $0.86/lb. Looking ahead, the interest is shifting to the turkey segment for Thanksgiving. However, some restocking and building of freezer items for export will support some of the primals.

Bacon:

THE MARKETS ADD VALUE AGAIN THIS WEEK, PRESSING THE BELLY COMPLEX TO NEW 2024 HIGHS THIS WEEK:

The belly market did not concede upward risk / momentum this week, with new single day highs surpassing 175 (USDA PRIMAL) / 225 (USDA 9/13 DERIND) this week. The average for the 5-day pricing week came in at 170 (USDA PRIMAL) / 215 (USDA 9/13 DERIND) --- up from last week’s averages of 160 (USDA PRIMAL) / 205 (USDA 9/13 DERIND). As noted last week, current market levels continue to establish new HIGHs for this calendar year, as the summer seasonal peak was established at 150’s (USDA PRIMAL) / 180’s (USDA 9/13 DERIND) in August. Industry experts expect this market strength to come to an end, and pivot to seasonal weakness any day / week, with general downward pressure (risk) expected now through the end of the year. With recent strength continue to surprise, while weakness is forecasted it cannot be ruled out that lingering strength could remain a little longer. That said, the short-term outlook calls for returning weakness, as soon as next week – and we expect successive weeks, with a projected floor / bottom near 100 (USDA PRIMAL) / 125 (USDA 9/13 DERIND) ahead of the coming winter holidays.