Market Trends - Jul 2018
After dropping 2.5% last week, the Choice cutout was down 1.5% or -3 cents/lb. to $2.06/lb. The Select cutout again dropped 1% week-over-week and was at $1.98/lb. The Choice/Select spread narrowed to $8.97/cwt.
For the Choice primals, short plates and rounds were up 1% week-over-week while chucks were steady. Flanks and ribs were down 2%, loins were down 4%, and briskets were down 7%.
Demand for loins and ribs seasonally slows during the “dog days of summer” as the hot weather limits grilling in the U.S. Prices are being pressured by slower seasonal demand and the record high production levels. After decreasing for the past five weeks, 50% trim prices moved higher this week up 7% or +4 cents/lb. to $0.67/lb.
Weekly estimated beef production was up 15.4% from the previous holiday week and up 3.9% from last year. Year to date production is up 3.5% with slaughter up 3.0%.
Weekly slaughter was 650,000 head, up 15.0% from last week and up 4.2% from last year. Live weights were 1,325 lbs., up 3 lbs. from last week and from last year.
Dressed weights averaged 804 lbs., up 2 lbs. from last week but down 2 lbs. from last year. USDA did not report steer prices on Friday as there was no significant trade, but last week, prices were $110/cwt up 3% from the previous week.
Futures contracts were down from last Friday: August: $104.55 (-$1.83), October: $107.38 (-$2.25), and December: $111.40 (-$2.30).
Beef – The 2018 beef production estimate was raised slightly from last month on higher expected cow slaughter. 2018 beef production is now expected to be up 3.7% from last year at 12.32 mmt. The 2019 estimate was revised slightly lower, with production now expected to be 12.56 mmt, up 2.0%. Production is expected to set new records in both 2018 and 2019.
After averaging $121.52/cwt in 2017, live steer prices are expected to average $115.50/cwt in 2018 and $117.50/cwt in 2019.
USDA estimates that per capita beef consumption increased by 1.4 lbs. (+2.5%) to 56.9 lbs. in 2017. 2018 per capita consumption is expected to increase by 1 lbs. (+2%) to 57.9 lbs, and 2019 per capita consumption is expected to increase by 0.8 pounds (+1%) to 58.7 lbs.
Total Red Meat and Poultry – After increasing by 2.6% in 2017, total red meat and poultry production is expected to increase by 2.9% in 2018 (with poultry up 1.6%) and by 2.3% in 2019 (with poultry up 1.8%).
While retail prices were steady in June, wholesale prices dropped by 4% from May and were down 9% year-over-year. With the decrease in wholesale prices as retail prices remained steady, the difference between wholesale and retail prices widened to $2.59/lb. in June. The June wholesale to retail price spread was up 6% from May and up 5% from last year.
The beef byproduct allowance continued to move lower and dropped to 19.9 cents/lb. in June. This was down 6% from May and down 23% from last year (note the beef byproduct allowance includes hides).
SOURCE: USMEF
