April 12, 2004

US Beef Prices Up On Reduced Slaughter, Easter Demand

U.S. Department of Agriculture choice-grade beef prices surged 12.5% this week while select-grade beef advanced 12.1% due to a combination of sharply reduced slaughter levels this and last week along with improved buying interest from retailers for beef to be delivered after the Easter holiday.
 
U.S. beef packers reduced their cattle slaughter operations last week and even further early this week due to consistently negative margins. Monday's kill was estimated at just 78,000 head, only about 58% of the industry's daily capacity. After Tuesday's kill was reported at just 103,000, still well down from normal levels, beef prices began their upward move.
 
Packers' fresh beef operations' margins, as calculated by Hedgersedge.com, started the week in the red at minus $14.45 per head but they improved rapidly as wholesale beef priced moved sharply higher. By the end of the week, packers were generating margins of $63.00 per head, and that encouraged them to boost their slaughters Thursday and Friday. The week's total was estimated at 564,000 after the first three days figures had amounted to just 294,000 head.
 
Ideas held by a number of cash cattle market sources late in the week were that next week's slaughter might be back up to around 600,000 or more head since packers are back into positive margins and on expectations for demand from retailers to be better following Easter. However, some remain cautious after several plants were closed on Monday and Tuesday this week.
 
THIS WEEK'S ESTIMATED SLAUGHTERS, COMBINED MEAT PRODUCTION
 
Year-to-date cattle slaughter is estimated at 8.528 million head, down 9.0% from a year ago.
 
Hog slaughter this week was estimated at 1.973 million head, compared with 1.928 million last week and 1.902 million a year ago. Year-to-date hog slaughter is estimated at 28.108 million head, up 1.4% from last year.
 
This week's combined meat production - for beef and veal, pork and lamb/mutton - was estimated at 812.4 million pounds, versus 817.4 million last week and 863.2 million a year-ago.
 
Broiler slaughter this week was estimated at 149.984 million head, compared with 152.052 million a week ago and 152.185 million a year ago.