May 19, 2008

 

Strong demand supporting US beef, pork cutout values

 

 

Domestic and export demand is keeping both beef and pork cutout values strong, when often these two meats can move in opposite directions, market analysts said.

 

Pork cutout values topped out Thursday at US$82.25 per hundredweight, up 10 percent from US$74.38 from May 1.

 

Choice beef cutout values rose from US$137.09 on April 4 to top US$156.84 on May 12, rising 14.5 percent in close to 40 days.

 

This was despite high slaughters for both meats.

 

This week's cattle slaughter was estimated at 719,000 head, up 2.1 percent from 701,000 a year ago. Year-to-date cattle slaughter is up 1.3 percent from a year ago.

 

The week's hog slaughter was estimated at 2.065 million head up 5.4 percent from 1.958 million a year ago. Year-to-date hog slaughter is up 10.1 percent.

 

The rising prices for both meats defies the usual trend whereby they usually move in opposite directions when consumers pick beef over pork during certain holiday periods and vice versa in others.  

 

Analysts have put forward a list of reasons for the trend.

 

Ron Lemenager, a Purdue University beef specialist, said it likely was a supply issue.

 

Despite heavy slaughter of both hogs and cattle, the red meat pipeline is not saturated, he said. Strong demand has kept products moving.

 

Also, a cut in Canadian exports of feeder pigs to the US looks increasingly likely as the US country-of-origin rules begins to take effect, causing prices to move higher as supply is lessened, he said. Meat processors in the US are leery of taking Canadian imports once country-of-origin rules take effect as they as unsure of its demand.

 

Moreover, cow numbers are down from previous years, Lemenager said. Although there are a lot of cattle on feed, Lemenager said there would not be more coming after them that would be ready for slaughter in coming months.

 

Higher demand could also be the cause of prices rising as the grilling season approaches, according to Clem Ward, professor of agricultural economics at Oklahoma State University. Grocers also may be hoping that economic stimulus checks issued to consumers by the government could result in more meat purchases, he said.

 

The beef market could also have been further boosted by news that South Korea is reopening of its market to US beef, even though no actual shipments have began, they said.

 

 

Total meat production

 

The USDA estimated total beef, pork and lamb production for the week at 968.2 million pounds, up 4.4 percent from the year-ago figure of 927.1 million pounds. Year-to-date combined meat output is up 6.0 percent.

 

Broiler/fryer slaughter this week was estimated at 169.819 million head, up 4.9 percent from 161.829 million a year ago.