Market Update From the West Coast Meatheads
October 8, 2016
Cattle markets continue to see volatility, as have cattle futures markets. Over the recent weeks, futures have seen a pull back in near term contract values, which has led to weaker cash cattle sales. In late 2014 and early 2015, the price of live cattle surged to historical levels, reaching a weekly historical high on the CattleFax Six-State Fed Steer Pricing during the week of November 25, 2014 at $172.68. Twenty-two months later, the value of the market-ready live animal has diminished to pricing last seen in late 2010. Sales this week of the live animal ranged between $101/cwt and $104/cwt, to average near the $103/cwt level.
The last time we saw live cattle price below $100/cwt was in 2009.
Beef cutouts early week held a positive tone, posting gains through mid-week. As the week closed, cutout pulled back, settling just slightly above the week prior’s closing levels.
Gains were seen with some rib values and end cuts. Thin meats remained weak. The wholesale market for grinds was relatively sideways.
Choice ribs held strength while Select and no-roll spot market prices slipped lower. Retail buyers were seeking Choice ribs.
Beef packers struggled to find clearing prices for Select and no-roll loins. Top butts trade amid a weak tone during the last week of September.
Although this week’s production declined from last week, it still set a new year-over-year record at 508.1 million pounds.
This was the first year in history we have had a 500-million+ pound production week in September; this week makes for two 500-million-plus-pound weeks in a row.
For yet another week, bellies were among the few standout performers in the green meat complex. Bellies continue to see strong demand for fresh product, supporting values and keeping inventories tight along the way.
Excess supplies and some labor concerns sent bone-in hams down notably. Boneless hams traded lower as well but to a lesser degree. Demand for all trimmings outside of boneless picnics and cushion meat has been lackluster. Robust production sent 42s and 72s lower while export interest helped support picnics.
Despite at times aggressive marketing stances this week, chicken processors are not able to attract enough demand to better situate themselves in a protein-filled climate.
Buyers have a number of attractive options from which to choose but in the end, needs tend to be satisfied and there’s no more room to make additional spot purchases.
Suppliers have voiced concerns tied to Hurricane Matthew and there is little doubt that, at the least, business patterns will be interrupted moving forward.
Current offerings across all quoted segments have been adequate for the immediate and near future call. Boneless breasts and tenders are struggling to find support and they continue to trend lower.
WOG and whole-bird sellers are barely scraping by. The markets are testing our current quotations and, overall, chickens are unsettled. Bone-in back half-lines are easy and available to anyone seeking them, but it’s fair to say that buyers are selective on all back-half offerings. Jumbo wings have found decent support but even in this seasonal arena, we sense that buyers are relatively satisfied for short-term expectations and that they’re taking their feet off the gas a little, taking more of a wait-and-see stance.