Beef, Poultry & Pork Market Update

Beef: Beef production last week declined 1.4 percent (w/w) but was up 1.6 percent (y/y). Year-to-date beef output is running 0.8 percent bigger than a year ago which compares to the USDA’s H1 (’22) beef production (y/y) gain of 0.5 percent. The weekly average USDA Choice cutout was down 2.4 percent (w/w) and was 9.8 percent lower (y/y). Adequate cattle numbers (pending slaughter) and active beef production are equaling solid beef supplies. Beef demand is showing signs of weakness which isn’t a surprise considering the USDA choice boxed beef cutout is the third most expensive for this time of year on record. The beef trim and ground beef markets are historically inflated, and beef trim import prices are elevated as well. Per the USDA, on March 3rd domestic cold storage boneless beef inventories were 8.1 percent larger (y/y) and grew by 0.6 percent during the month. It appears (at least so far) that this year’s springtime beef price increases are going to remain modest, and the seasonal peak may have already occurred. In Q2 so far, the USDA Choice boxed beef cutout is averaging 0.6 percent lower compared to Q1 which is counter seasonal price action. Since 2011 the USDA Choice boxed beef cutout averaged 10.8 percent higher in May compared to the prior April, but this same USDA Choice boxed beef cutout averaged 6.0 percent lower in June versus the previous May.

Chicken: Chicken slaughter for the week ending April 23rd was 0.09 percent lower (w/w) and the average bird weight was lighter by 0.3 percent (y/y). Ready-to-cook chicken production increased 0.6 percent (w/w) but was 2.4 percent less than a year ago. Year-to-date ready-to-cook broiler production is running 1.1 percent larger (y/y) which is slightly more than the USDA’s H1 (’22) chicken output forecast gain by 1.0 percent (y/y). Last week the USDA national whole broiler/fryer index rose 1.1 percent (w/w) and was 61.1 percent higher than the same week last year. Well, boneless skinless chicken breast prices continued to make all-time highs last week and have not shown any signs of slowing down. The USDA reported that breast meat cuts are tight too short, but they also described retail and foodservice chicken demand as mostly moderate which sure doesn’t represent the rapidly rising breast prices. Friday’s USDA average chicken breast price was a whopping $0.50 or 18.3 percent costlier than the 90 percent beef trim market, which is rare, to “say the least”! History suggests that there may still be upside chicken breast market increases pending but prices usually peak for the year in May. Current USDA chicken wing prices are the lowest in 21 months so the downside risk for wings from current levels may be nominal.

Pork: Pork production last week was 1.2 percent larger (w/w) but was 0.2 percent smaller (y/y). Year-to-date pork output is running down 5.5 percent (y/y) which is less than the USDA’s H1 (’22) pork production forecast of down 3.9 percent (y/y). The weekly average USDA pork cutout last week lost 3.8 percent (w/w) and was 3.7 percent lower (y/y). Despite lagging (y/y) pork production and expected tightening hog supplies moving forward, the wholesale seasonal pork market gains have not been impressive at least so far this spring. U.S. pork export demand has fallen since last year, especially from China. Domestic pork production is expected to improve however in the second half of 2022 which may limit any notable price gains for pork like was experienced last summer when the USDA pork cutout established an all-time high. Since 2011, the average move for the USDA pork cutout during May compared to the prior April is up 8.5 percent.