June 2, 2008

 

Beef keeps moving in US despite economic slowdown and high slaughter

 

 

Despite record-high gasoline prices and ongoing concerns about the economy in general, packers so far have been able to keep the beef moving through the pipeline, even with hefty slaughter rates in recent weeks.

 

Beef packers maintained large daily slaughters this week, and most are scheduled Saturday operations as well. Beef demand in the period from the Memorial Day holiday through Independence Day is considered the strongest of the year for certain cuts, especially the premium grilling items such as choice T-bones, strips and rib-eye steaks.

 

US beef processors paid mostly US$1 per hundredweight higher prices for fed cattle this week while pork packers were able to put some pressure on hog prices in the shortened work week.

 

By mid-morning Friday some firmer indications began to develop for cash hog prices next week as packers sought additional supplies needed for delivery Tuesday or later.

 

Wholesale beef prices changed little for the week compared with last Friday. The USDA reported the choice beef carcass composite value Friday afternoon at US$155.39, down only slightly from US$155.97 a week ago. The select beef quote was US$152.03, compared with US$151.84 a week ago.

 

Less distance traveling may be allowing some families to spend more at the grocery story for steaks for the backyard grill, analysts said.

 

However, the combined production, sales and exports statistics point to a decline in consumer demand for beef during the January-April period; beef demand is expected to be down 2.6 percent from a year earlier.  according to Ron Plain and Glenn Grimes, agricultural economists at the University of Missouri.

 

Pork demand during the first four months was up 3.5 percent from a year ago, while packer demand for hogs was up even more, Plains and Grimes said in their latest hog outlook report.

 

Demand has been the key driving force behind the stronger-than-expected rally in cash hog and wholesale pork prices this spring and could be the catalyst to put the market back on an uptrend next week, according to some analysts and brokers.

 

Wholesale pork prices at week's end were quoted at US$79.74, off only $0.45 from a week ago. The USDA's national weighted average hog price, however, for Friday was down US$3.80, or 5 percent from a week ago.