Current Situation and Analysis – 5/10/2024

Pork Cutout and Primal Values

The pork cutout value slipped below $100 for the last few weeks but remains about $17-$19 per cwt above where prices were last year. In mid-April, the pork cutout value hit just over $100 for two consecutive weeks, the highest so far for 2024. At this time last year, the pork cutout value was just hitting $80 per cwt, and the five-year average for early May is $92 per cwt. The pork cutout value seasonally peaks during the summer (June or July), but the strength in the pork cutout is a positive signal that the demand for pork has strengthened.

Primal values for the loin, butt, and picnic have been trending upward since the start of the year. The loin primal value topped $100 per cwt last week, up 24% ($20 per cwt) from the start of the year and 23% ($19 per cwt) higher than the same week a year ago. Last year the loin primal value hit $100 for only two weeks in mid-July, so the loin primal value is tracking ahead of seasonal trends seen last year. Last week’s butt primal value was $130 per cwt, up 25% ($26 per cwt) from January and 10% ($12 per cwt) higher than last year. If the butt primal value follows a similar trend to last year, its value could go higher, considering the butt primal value spiked to $165 per cwt in late June 2023. The picnic primal value has been moving counter-seasonally higher for the last few weeks with the most recent value at $81 per cwt, up 25% ($16 per cwt) from last year and 9% ($7 per cwt) higher than the start of the year. The ham primal value has fluctuated since the start of the year but is generally trending higher with last week’s value at $82 per cwt, up 7% ($5 per cwt) from last year. The rib and belly primal values have been indicating a weaker tone over the last several weeks. Last week’s rib value was $165 per cwt, down 6% from the recent peak of $175 per cwt in mid-March. The belly primal value was $117 per cwt last week, 18% lower than the recent peak of $143 per cwt in early February.

Trade Update

March trade data showed exports across beef, pork, lamb, and chicken were mixed compared to a year ago while imports were generally higher. Beef exports totaled 256.1 million pounds in March, down 10.4% from last year. Through the first quarter of 2024, beef exports were down 5.9% to 732.8 million pounds. First quarter beef exports to four of the top five destinations were lower with South Korea down to 160.0 million pounds (-8.8%), Japan fell to 166.2 million pounds (-10.8%), China decreased to 115.3 million pounds (-7.4%), and Canada dropped to 56.0 million pounds (-2.7%). For the top destination, Mexico, beef exports for the first quarter increased 10.6% from last year with March at 340.8 million pounds. Through the first quarter, beef imports were up 25.0% to nearly 1.2 billion pounds. The larger growth was due to higher beef imports from Canada (+12.8%), Brazil (+24.8%), Australia (+112.9%), and New Zealand (+32.0%).

Pork exports totaled 621.1 million pounds in March, up 2.1% from last year. Through the first three months of the year, pork exports increased 8.0% to 1.8 billion pounds. Nearly one-third of total pork exports during the first quarter were to Mexico, which increased 2.9% from a year earlier to 650.5 million pounds. First quarter pork exports were 54.5% higher to South Korea to 214.2 million pounds while exports were lower to Japan (-0.3%), Canada (-3.6%), and China (-37.1%). Pork imports were 104.0 million pounds in March, up 6.3% from a year ago. Through the first quarter of 2024, pork imports increased 4.9% from last year to 297.8 million pounds. The increases were due to higher pork imports from Denmark (+35.7%), Mexico (+2.3%), and Poland (+3.8%), which more than offset decreased shipments from Canada (-5.9%).

Lamb imports totaled 27.2 million pounds in March, up 8.0% from last year and reflective of the typical seasonal pattern leading up to the Easter holiday. First quarter lamb imports posted a 20.2% increase over 2023 to 71.2 million pounds, the largest quarter since the third quarter of 2022. Lamb imports increased during the first quarter from Australia and New Zealand to 52.7 million pounds (+23.8%) and 17.5 million pounds (23.6%), respectively.

Broiler exports fell 11.8% in March to 558.5 million pounds. During the first quarter, broiler exports decreased 8.5% to 1.7 billion pounds. Lower first quarter broiler exports were due to lower shipments to Mexico and the Caribbean, which fell 2.8% and 6.0%, respectively, to 395.3 and 211.7 million pounds. Lower broiler exports were also shipped to Canada (-5.4%) and Angola (-15.9%) during the first quarter.

CHICKEN DEMAND

Through the first four months of 2024, demand for chicken has been picking up momentum. Breast meat prices at the wholesale level bounced from a December average of $0.99 per pound to an April average of $1.70. Prices in May are stabilizing at $1.75. Underlying the price recovery is a decline in chicken in cold storage, which declined by more than 100 million pounds from the beginning of the year to April 1. A decline in frozen chicken inventories of this magnitude is unusual and is a consequence of consumer demand returning to normal levels following unusual weakness during the last quarter of 2023. Chicken industry profitability has mirrored the gains in breast prices (along with similar gains in wing prices and steady-to-firm leg parts pricing). Accelerated production gains in the second half of the year are expected.

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