October 13, 2008


US livestock, meat prices decline on economy concerns



US cattle, hog and meat prices declined this week in large part due to concerns among consumers, retailers and suppliers about the economic crisis.


US consumers have begun changing their purchasing habits and/or are dining out less in order to stretch their food dollars, according to analysts and brokers.


Retailers also are being cautious buyers to ensure they do not have excess inventories of perishable products, particularly the higher-priced fresh meat cuts. These buying practices tend to slow the movement of product throughout the distribution channel and cause backups at the processing plants, generally resulting in lower wholesale prices, analysts said.


There are anecdotal reports of slowed export sales as well. The international markets are important to the nation's meat and poultry industries for growth. The US is considered a mature market, and the export markets serve multiple purposes including allowing for industry expansion and for selling certain products that are not as popular in the US. If, however, export sales turn slow, that would leave more production to be absorbed within the domestic market, pressuring prices.


Choice beef prices declined US$2.91 per hundredweight this week. Select beef lost US$3.35 in value. Live cattle prices fell US$3 to US$4 on a live weight basis, compared with last week's sales, and dressed cattle prices slid US$5 to US$7.


Derrell Peel, livestock marketing economist at Oklahoma State University, told Dow Jones newswires that declines in boxed beef values over the last two weeks have pressured packer margins, which resulted in weaker bids for the cattle.


The pork complex was lower on both sides of the ledger this week with hogs losing US$4.33 on a weighted average carcass basis nationally while the USDA's pork carcass composite value slid US$4.29, or 5.9 percent.


Livestock dealers, analysts and meat brokers predict lower prices for the pork complex in the week ahead. Some said seasonal expansion in supplies and uncertainty about the ailing economy could weigh on pork and hog prices for the next four to five weeks. Export sales could be a wild card that may be either supportive or negative for the market depending upon how active international sales are during the period, analysts said.


Analysts and livestock dealers are urging producers to stay current on their marketing of hogs in order to avoid backing up supplies on the farms and to prevent the animals from becoming too heavy.


Last week's cattle slaughter was estimated at 650,000 head, compared with 630,000 a week ago and 639,000 a year ago. Year-to-date cattle slaughter is up 0.7 percent from a year ago.


Hog slaughter for the week was estimated at 2.375 million, compared with 2.323 million last week and 2.340 million a year ago. The year-to-date hog slaughter is up 8.0 percent.


The USDA estimated total beef, pork and lamb production for the week at 990.3 million pounds. Previous week's output was 961.5 million pounds, and the year-ago figure was 982.0 million pounds. Year-to-date combined meat output is up 4.1 percent.


Broiler/fryer slaughter last week was estimated at 163.743 million head, compared with 164.393 million a week ago and 167.086 million a year ago.

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