Beef, Poultry & Pork Market Update

Beef:

Last week, the average USDA Choice boxed-beef cutout lost 0.7% from the prior week, and it was 12.9% higher than a year ago. Beef production declined 1.8% from the prior week and was 1.8% smaller than a year ago. Per the USDA’s March WASDE report, U.S. beef production for 2023 increased by 170 million pounds (m/m) but is forecasted to be 5.7% smaller than in 2022. The USDA is also estimating that this year, per capita beef consumption will decline by 4.1% (y/y), which may be tough to achieve considering that 2022 per capita beef consumption was up 0.4% (y/y). Per the USDA, January U.S. beef exports were 17.2% smaller (y/y), 9.6% less than the prior month, and the smallest for the month of January in four years. Still, in 2022 U.S. beef exports were up 3.7% (y/y) and a record, following 2021, which was the prior all-time export year. Domestic beef exports have increased a whopping 21.6% since the end of 2020. January U.S. beef imports were 9.3% smaller (y/y) but the third most for the month on record. In 2022, domestic beef imports were 2.8% larger (y/y) and a record. The current USDA Choice boxed-beef cutout value is 8.0% above its 2022 average and the highest for March on record, and seasonal gains are expected. In the last five years, the Choice boxed-beef cutout has averaged (cumulative) 30.0% higher in the next 10 weeks.

Poultry:

Last week, the National Composite Whole Bird Index increased 2.2% (w/w). For the w/e March 4, the weekly number of chickens slaughtered was up 0.2% from the prior week and 0.5% larger than a year ago. The average bird weight was 0.5% lighter (y/y). Ready-to-cook chicken production for the w/e March 4 was 2.4% smaller (w/w) but up 0.06% (y/y). 2023 ready to-cook chicken output is running 1.5% better than in 2022, which is a smaller increase than the USDA’s Q1 2023 forecasted production gain of 2.1% (y/y). The large shell egg market (national average) increased 7.2% (w/w) but is 49.3% lower than December’s record high. The USDA turkey breast (BS) price lost 11.3% (w/w) and is now down 47.3% from October’s alltime high. Per the USDA’s March WASDE report, U.S. broiler production for 2023 increased by 50 million pounds (m/m) and is forecasted to be 1.2% larger than in 2022. The USDA kept its 2023 per capita chicken consumption estimate flat (m/m) and is projected to be 1.3% stronger (y/y). 2023 domestic egg production is forecasted to be up 2.8% (y/y), and turkey output this year is projected to improve by 6.9% (y/y). Per the USDA, in January, total U.S. broiler meat exports were up 13.0% (y/y), and the largest for the month on record (y/y). In January, U.S. turkey meat exports were down 26.5% (y/y) and the smallest for the month since 1999. Expect chicken breast and chicken wing prices to continue to rise. Egg prices are seasonally rising but usually peak in early April. Turkey breast prices usually bottom in April.

Pork:

Last week, the weekly average USDA pork cutout added 2.6% from the prior week and was 16.8% lower than a year ago. Pork production decreased 0.7% from the prior week and was 0.1% less than a year ago. Year-to-date pork output is running 0.7% above a year ago, which is a smaller gain than the USDA’s Q1 2023 production forecasted increase of 1.4% (y/y). Spot lean hog prices are down 20.5% (y/y). Per the USDA’s March WASDE report, U.S. pork production for 2023 was lowered by 25 million pounds (m/m) but is forecasted to be 1.5% larger than in 2022. The USDA lowered its 2023 per capita pork consumption estimate by 0.2% (m/m) and is now expected to be 0.2% lower (y/y). Per the USDA, total domestic pork exports in January were up 10.6% (y/y), and the third best for the month on record. The biggest foreign buyers of U.S. pork resulted in January exports to Mexico, up 5.1% (y/y), Japan, up 14.5% (y/y), and China, up 38.3% (y/y). The current USDA pork cutout (value) is 15.3% lower than the 2022 average, which could equal stronger-than-normal seasonal buying, especially with inflated beef prices. History suggests that the downside risk for the pork markets is nominal this time of year. Since 2018, the USDA pork cutout has averaged (cumulative) 22.2% higher during the next 10 weeks.