Prices for fed cattle are expected to improve going forward as supplies decline into late year and demand rebounds coming out of the summer doldrums.
We could see late August prices back to near $122/cwt with September ending closer to $125/cwt. The tightest supplies will occur during the fourth quarter.
Prices during late October could be near $126/cwt and then move sideways to firmer in November and early December toward the upper $120s. Past the holiday demand in early December, values could begin to fade with late December currently forecast to be in the $126 to $127/cwt. range followed by January that could trade in the mid-$120s.
Expect prices for loins to find support over the next week or two as buyers see better value at current levels coming out of summer and heading into fall.
PSMOs will have the most upside as August develops with other loin items trading steady to softer through fall and early winter. Cattle supplies will decline in the fourth quarter and will be modestly larger than a year ago so prices may hinge on demand. If demand can stay near current levels, prices will likely be modestly below a year ago. If demand is softer going into year’s end, the price risk will be greater. Stay tuned!
The rib complex should be approaching its summer lows. Buyers recognize the value in the market at current prices and inquiries for out-front delivery have been more active.
The packer recognizes the seasonal trend higher, and favorable price points into the holidays have been difficult to secure.
Weakness in deferred live cattle futures still suggests there is an opportunity to inquire about second half 2016 pricing. Buyers simply need to remain persistent, and realize that middle meats will likely carry a larger percentage of the cutout value into year’s end.
Ample production levels continue, while demand/usage was softer from both domestic and export interest. The result was sharply lower values in the live hog and pork complex.
Live hogs in the terminal markets were selling from $49 to $52/cwt. Federally inspected (F.I.) harvest levels were 2.184 million head last week.
Production levels were up two percent compared to the prior week and up two percent compared to year ago production levels. F.I. harvest weights are at 278 lbs. compared to 279 lbs. a year ago.
Whole bird pricing moved a pinch higher last week, continuing its seasonal strength. The general tone within the product side is more positive, but little price movement has been observed.
USDA reported June ready-to-cook (RTC) young chilled and frozen production at 532 million pounds, up 16.7 percent from June 2015. There were equal slaughter days this June compared to June 2015. Turkey live weight production was reported at 668 million pounds, up 17 percent. Live weights during June 2016 averaged 30.6 pounds per bird, up two percent from a year ago.
The dark meat side of the complex (whole leg meat and thighs) showed strength last week on what appears to be more supply related issues, with labor shortages and hot weather being called out as the primary culprits.
Whole birds and breasts were quoted lower last week. USDA reported June production numbers last week. Ready-to-cook (RTC) production was up three percent at 4.07 billion pounds. Federally inspected young chicken live weight production was reported at 4.62 billion pounds, up two percent. Weights averaged 6.14 pounds per bird, up one percent from June 2015.