October 6, 2008
US wholesale meat prices weaken amid slackening demand
US wholesale red meat prices are weak as export and domestic demand slackens amid economic uncertainty, market analysts and economists said.
The immediate outlook for red meats also is clouded with uncertainty and likely price weakness as domestic and export customers pull away from a weakening price structure.
Through Thursday (October 2) afternoon, US Department of Agriculture choice boxed beef cutout prices fell US$7.52 per hundredweight, or 4.66 percent, from the latest peak of US$161.21 on Sept. 17.
At the same time, the pork cutout declined US$3.81 to US$73.14 from a near-term high of US$76.95 on September 18 for a 4.95 percent drop, USDA figures showed.
Jim Robb, agricultural economist for the Livestock Marketing Information Center, said a slowdown in export demand for pork can be blamed for much of the decline in pork cutout values. Pork production is well above a year ago, filling market needs quickly as the export demand fades, he said.
John Nalivka, president of Sterling Marketing Inc., said the export market pulled pork prices higher all summer, and with the added production this year, the wholesale market needed as much product removed from the market as possible to keep prices firm.
For beef, analysts and economists pointed to prominent weakness in beef middle meat values at the wholesale level. These cuts are the more expensive portions of the beef carcass, and packers need them to be strong to hold up the carcass cutout value.
The weakness in the beef middle meats is the result of weakening consumer demand for these more expensive cuts and shows a decline in restaurant demand.
Typically, the beef rib-eye will gain in value soon as buyers gear up for the upcoming holiday demand, Nalivka said. If it doesn't, it shows a real loss of demand for beef amid the economic crisis, he said.
Last week's cattle slaughter was estimated at 630,000 head, compared with 659,000 a week ago and 671,000 a year ago. Year-to-date cattle slaughter is up 0.7 percent from a year ago.
The year-to-date hog slaughter is up 8.2 percent at 2.323 million head, compared with 2.358 million a week ago and 2.310 million a year ago.
The USDA estimated total beef, pork and lamb production for the week at 960.4 million pounds. Previous week's output was 987.2 million pounds, and the year-ago figure was 1.0 billion pounds. Year-to-date combined meat output is up 4.1 percent.
Broiler/fryer slaughter last week was estimated at 164.981 million head, compared with 165.893 million a week ago and 173.849 million a year ago.
