Beef, Poultry & Pork Market Update

Beef:

The CME February cattle contract, now the nearest on the board, increased by 2 percent week-over-week to $198.35/cwt. Spot/cash cattle prices rose to $197.00/cwt. Steer carcass weights increased by 4 pounds to 1,433 pounds, which is 22 pounds heavier than last year. Weekly harvest was 498K, down by 8 percent compared to last year. Beef production reached 432.2 million pounds. Reduced beef production and higher cattle prices pushed beef cutout values up last week. The choice cutout rose by 2 percent to $330.78/cwt, while the select cutout increased by 4 percent to $308.35/cwt.

In the choice cutout breakdown, the bone-in export rib dropped by 14 percent to $10.43/lb, and the boneless ribeye decreased by 12 percent to $11.26/lb. Out-front sales for bone-in export ribs have been observed around $9.50/lb, indicating potential further declines in the rib complex. The loin complex showed mixed results last week, with tenderloins trading lower but other loin subprimals showing strength. Choice tenderloins fell by 11 percent to $12.74/lb and are expected to continue declining for the rest of the month despite reduced beef production. Choice striploins increased by 5 percent to $8.30/lb, and shortloins rose by 9 percent to $7.66/lb. Top sirloins remained flat at $4.06/lb. Processors are building inventory positions in the loin subprimals in preparation for the spring grilling season.

End cuts (chucks and rounds) continued to rise last week. In the chuck segment, chuck rolls increased by 7 percent to $5.00/lb, and shoulder clods rose by 7 percent to $4.02/lb. In the round complex, inside rounds increased by 4 percent to $4.00/lb, and bottom round flats rose by 9 percent to $3.97/lb. The retail/grocery sector is heavily advertising end cuts to drive foot traffic into stores. Ground beef 81% increased by 9 percent to $3.22/lb. In the trim segment, the price of 50% trim sharply rose by 12 percent to $1.04/lb, and 90% lean trim increased by 4 percent to $3.42/lb.

Looking ahead, the rib complex is expected to continue its decline, but strong retail demand for end cuts and ground beef has driven the cutout higher. Processors are building positions in loin meats in preparation for the spring grilling season, which will likely lead those subprimals higher.

Advancing cattle prices remain a key driver behind firm boxed beef offering levels, with many items in the market continuing to feel upward pressure. As offering prices and trading levels advance, some buyers are showing resistance, leading to a cautious tone in the marketplace. Market participants are now focusing on consumer behavior, watching closely to see if higher wholesale prices might reach the retail sector. Value items, such as chucks and rounds, have become a focal point for buyers seeking to balance beef costs. Shoulder clods, bottom round flats, and eye rounds all saw higher trading today. In the live cattle market, trades have been confirmed at $201 in the Southern Plains.

Poultry:

The USDA reported that the young chicken harvest was 130.8 million head, which is 2.8 percent lower compared to the holiday-shortened harvest week last year. However, the individual bird harvest weight increased to 6.71 pounds per bird week-over-week, higher than last year's 6.54 pounds per bird. Despite the decrease in harvest, the larger birds resulted in an overall production of 667.3 million pounds, which remained flat compared to last year. Retail chicken promotions surged by 21 percent last week, with notable increases in advertisements for white meat segments, including breasts and tenderloins.

Breaking down the segment, the National Composite whole birds and WOGs (without giblets) increased by $0.03 week-over-week to $1.35 per pound. The foodservice WOGs, particularly the heavily purchased 2.5 to 3.5-pound WOGs, also rose by $0.03 to $1.35 per pound. The 2.5-pound and under WOGs were higher by $0.01 at $1.44 per pound, while the 3.5-pound and over WOGs increased by $0.08 to $1.21 per pound. In the white meat segment, boneless/skinless breasts increased by $0.02 to $1.45 per pound, and tenderloins rose by $0.04 to $1.70 per pound. Chicken wings remained flat at $1.90 per pound, but drumsticks saw a 10 percent increase to $0.52 per pound. Boneless/skinless thigh meat decreased by $0.05 to $1.44 per pound, while bone-in thighs remained flat at $0.94 per pound.

The USDA’s large eggshell index increased by 5 percent week-over-week and nearly 48 percent over the past month. The cost of eggs is expected to continue climbing due to the ongoing impact of highly pathogenic avian influenza (HPAI). Looking ahead, retail chicken features are likely to continue increasing as consumers prioritize cost-effective protein options. This trend is expected to drive an overall market increase, mirroring the recent upward movement observed in tenderloin and whole chicken prices.

Recent market input suggests that there may be more pressure on the WOG lines. Retail demand, which was quite active at the end of last week and the beginning of this week, has waned, and buyers are becoming more cautious. This is resulting in greater volumes of production making their way around the spot market. However, transactional data has been slow to surface, and quotations remain unchanged with a steady tone in place.

The breasts and front halves markets are solidly established. Meanwhile, the jumbo boneless breast meat market trades in a very irregular manner, with the overall sentiment leaning more bullishly. Retail activity is quite high, but offerings appear variable, possibly due to individual processors’ downtime related to the weather. The attitude among participants in the medium and select markets is more congruent and bullish than in the jumbo market, though limited transactions have been reported. The tender lines are trading very closely to the jumbo boneless market in terms of patterns and tones. A limited number of players have started to show production at a discount, while most pricing data indicates support. Wings are readily absorbed by foodservice during the playoffs, with small offerings being the most highly requested and sellers obtaining premiums for production. The chunk and trim meat markets have quieted and are mostly supported.

Domestic demand for legs, leg quarters, drumsticks, and thighs is helping absorb production. However, there is some irregularity noted, largely due to the influence of HPAI on export eligibility. Most of the production that has been shut out of certain export destinations can find a home domestically or in other less stringent export areas, but certain sizes or packs may prove more difficult to move than others. Domestic demand for thigh meat and leg meat appears to have improved. While production is still at least adequate, most reports point toward a steady market.

Pork:

CME hog futures and cash lean hogs showed mixed results last week. The CME February future, now the nearest contract on the board, finished up 2 percent to $82.50/cwt, with most other contracts higher by 1-2 percent. Spot/cash hogs, however, were down 3.8 percent to $81.59/cwt. The hog harvest was 2.28 million head, which is 3.4 percent lower compared to last year’s harvest. Overall pork production was 495.6 million pounds. The pork cutout traded higher by 1 percent to $90.48/cwt, marking the first increase in three weeks. However, most of the primals were lower, with only the belly and pork trim trading higher.

Breaking down the primals and subprimals, the loin primal was flat week-over-week. The price of boneless pork loin was down 4 percent to $1.34/lb. The loin/baby back ribs were flat at $2.35/lb, while the tenderloin was higher by 1 percent to $1.70/lb. The pork butt primal was down 3 percent week-over-week, with the subprimal bone-in pork butt lower by $0.03 to $1.25/lb and the boneless pork butt down by $0.01 to $1.37/lb. The rib primal was down 1 percent last week to $141.19/cwt. Medium spareribs traded lower by $0.02 to $1.54/lb. The ham primal was also down 1 percent last week at $79.54/cwt and has decreased by 28 percent over the past three weeks. Pork picnics were down 5 percent to $64.41/cwt and have dropped by 26 percent over the past two weeks.

Supporting the cutout has been the belly and pork trim segment. The belly primal rallied higher by 10 percent to $132.57/cwt. The subprimal derind 13/17 belly was up $0.17 to $1.63/lb. The trim segment was higher again, with 42% trim up 3 percent to $0.41/lb and 72% trim higher by 7 percent to $0.93/lb. Looking ahead, the pork complex is poised for upward movement from current levels. Constrained harvest levels and the potential for restocking freezer inventories, which are currently down nearly 6 percent from historical averages, should support market strength.

The cash hog market is anticipated to remain steady, with pork processors expected to bid mostly steady prices for hogs on Wednesday. Industry sources have expressed concerns about product movement and demand nationwide, citing challenges posed by extreme cold in some regions and wildfires affecting the West Coast.

Tuesday’s National Daily Direct Hogs ranged from $73.00 to $81.00, with a weighted average of $80.10 and a 5-day rolling average of $79.31. The live price was not reported due to confidentiality, but the 5-day rolling average was $60.12. Wednesday’s hog slaughter is projected to be 487,000 head.

The pork carcass cutout value has increased marginally by 0.5% since January 6th, largely supported by recent increases in the ham and sparerib primal. Slight declines in the loin primal and some varieties were noted.

In the green meat complex, bone-in hams are receiving steady to higher calls with supportive export interest from Mexico still noted as a factor. Boneless hams are receiving steady calls, with lackluster retail interest and increased availability on the spot market presenting the possibility of some downward pressure. Bellies are starting out sideways, but ongoing supply variations for fresh and frozen material remain a factor to monitor. In trim, both 42s and 72s are unchanged at inception, with reports of limited fresh supplies. In the fresh pork complex, bone-in loins are called fully steady, with the emergence of some retail features providing support. Meanwhile, boneless cuts are generally steady, with typical export cuts still being sought after. In the butt sector, bone-in material is called barely steady, with some sellers reporting slightly more material available in recent days. Boneless butts are called steady, with moderate domestic and export interest still present. In the rib segment, spareribs are called supportive, while back ribs and St. Louis ribs all begin the day unchanged.

Bacon:

THE BELLY COMPLEX FINDS EARLY VOLATILITY, AND THEN APPEARS TO STABILIZE LATE ACROSS THE 5-DAY AVERAGE THIS WEEK – GIVING BACK THE GAINS FROM LAST WEEK:

The belly markets pushed back against uneven strength in the category from over the holidays, as the USDA PRIMAL fell back down to near 110 early in the pricing week --- only to steadily work its way back up to 130 by weeks end… ultimately maintaining the same average as week prior. The USDA 9/13 DERIND market experienced less volatility and found a mostly stable week near the 160 level. Overall, belly market averages for the week came in near 125 (USDA PRIMAL) / 160 (USDA 9/13 DERIND) --- overall change from last week’s markets near 125 (USDA PRIMAL) / 175 (USDA 9/13 DERIND). Overall, the markets appear to be normalizing and expect the markets to continue to steadily find mild strength in the coming weeks. Look for values to work toward 145 (USDA PRIMAL) / 180 (USDA 9/13 DERIND) heading into early February… which could prove to be the HIGH for Q1 as the current outlook calls for the belly complex to plateau, and even retract mildly… with returning week-to-week volatility throughout the second half of Q1.

Markets this week experienced mixed trading, with the UDA PRIMAL finding volatility and generally holding flat on the average, and the USDA 9/13 DERIND finding mild contraction / weakness – giving back the gains in this market from last week. The forward outlook calls for markets to continue to stabilize and move into a trend of steady upward pressure – with mild to moderate strength driving markets up now through early February. This week, the belly markets averaged near 123 (USDA PRIMAL) / 161 (USDA 9/13 DERIND) – this is vs last week’s markets near 122 (USDA PRIMAL) / 173 (USDA 9/13 DERIND). The last two days of the pricing week, the primary belly markets appeared to normalize and returned to the historical ratio (spread) between them… with these market closes coming in near 130 (USDA PRIMAL) / 160 (USDA 9/13 DERIND). Expectations are for this ratio to likely hold, and to find markets push to levels near 145 (USDA PRIMAL) / 180 (USDA 9/13 DERIND) by early February.