Market Update From the West Coast Meatheads
April 2, 2017
The tone to the spot market changed considerably from the week prior, as beef processors needed to discount spot offerings. Buyers backed away from the market as negative pressure built.
Loins and rounds were the main drivers behind weakening cutout values. Beef packer operating margins took a big hit throughout the week, closing the week near breakeven, rather than at the week prior’s margins.
Contrary to the weaker wholesale market seen with loins, Choice ribs values were largely range bound with week prior. Select ribs saw price reductions develop.
The turnaround with loins this week was stark, as wholesale inventory was ample, forcing deep discounting. All cuts from the loin primal were in need of price reductions, and both choice and select product felt the brunt of the negative pressure.
Demand for grinds eased which led to depreciating wholesale values. Increased production last week played a role in fully adequate spot supply that aided in diminishing wholesale values.
What a difference a week can make when it comes to beef markets. Last week’s market opened with middle meats sustaining strength with spot market trades, and since our last report, loin values have depreciated in hefty fashion.
Angus ribs pulled back a bit, but not nearly to the levels that strips have moved. Angus rounds have also felt the brunt of slipping demand and increased production, losing a moderate level of wholesale value. Angus ground beef demand also eased lower, as the current call for spot supply fell short of clearing processors coolers.
The market for fresh pork products was weak across-the-board. Sellers entered the week with a limited sold position, which resulted in widespread availability; this and a generally quieted demand, weighed on the market.
Movement throughout the distribution chain was reported to be restricted, and as a result, buyers cut into some commitments leaving additional quantities available for spot sale.
The chicken market is well supported. Movement may not be as brisk as it was in recent weeks, but most listed lines are still found to be in good shape. Supply and demand are generally balanced. Whole birds and WOGs are rated about steady to steady.
According to some reports, WOG values have started to test lower. Whole breasts and fronts are commanding full market values when made available. Breast meat is well balanced. The smaller and medium sized meats are snug at most points of sale.
Tenders are fully supported. Wings have yet to soften, despite the March Madness tournament being near its completion. Thigh meat and leg meat are full steady to firm. Offerings are limited and held with confidence. Whole legs, bone-in thighs and drumsticks are moving with ease. Leg quarters are trading at market related price points.