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CME: US Meat Sector Sees Another Tough Week

by 5m Editor
1 June 2009, at 9:52am

US - CME's Daily Livestock Report for 29 May 2009 reports that it was another difficult week in the US meat business as prices fell at both farm and wholesale levels and, at least for live animal producers, costs increased.

And those price declines happened even while supplies were generally lower than one year ago — a more useful comparison that one week ago due to the Memorial Day holiday. Memorial Day fell in the same week in 2008 as it has in 2009. Consider some key numbers from this week’s Production and Price Summary table:

  • Cattle slaughter was 1.1 per cent lower than one year ago but average slaughter weights, though still higher than one year ago, continue to move close to year-ago levels and moderate the supply-growing influence that they exerted earlier this year. Average dressed weights were steady for the week at 769 pounds while live weights increased by 4 pounds to 1257 pounds.

  • Beef cow slaughter of 62,832 head remains sharply lower than one year ago. Note that these data are for the week ending 16 May, the most recent for which we have data. Dairy cow slaughter of 47,581 head during that same week is 22.6 per cent higher than last year bringing total cow slaughter to 110,413 head, 6.8 per cent higher than in the same week in 2008. And the Cooperatives Working Together dairy herd retirement plant has not begun to move dairy cows to slaughter so look for this number to grow in coming weeks.

  • FI hog slaughter was only 1.804 million head in this holiday-shortened week. That total was 1.2 per cent lower than last year and fractionally higher than the slaughter we had expected based on the March Hogs and Pigs Report. This is the third straight week in which slaughter has exceeded our forecast levels. That period corresponds to the postinfluenza rebound in slaughter but we never saw a sharply lower slaughter week from which to rebound. Are there a few more hogs out there than we had expected? Dressed weights remain 4 lbs. or 2 per cent higher than one year ago — when producers had begun to cut weights sharply in response to higher feed costs.

  • The pork cutout value and both cash and futures prices for hogs struggled again, calling into question just how much demand has actually recovered. We will not get much idea of May export business until the June Cold Storage report and then the actual export data in mid- July. This sideways trend in hog prices without the presence of surprisingly large supplies and during the time of year that we normally talk about a rally does not speak well for pork or hog demand.

  • The best news of the week came from the beleaguered chicken industry. Supplies remain firmly in check and prices appear to finally be responding with the two whole-bird prices shown here growing by 4.3 and 6.4 per cent and chicken part prices advancing across the board.