Newsletter

Processing

rss

Weekly North American market update 11 Dec 2009

The first big US blizzard this winter started in northwest states last weekend, which blanketed mountain regions in snow (and also caused drenching rains in southern California and other areas), then came across the Great Plains to upper Midwest by Tuesday night, with big snow falls and fierce winds causing widespread power outages and road closures. Up until yesterday, livestock marketings and slaughterings were not seriously affected, but some disruptions began occurring today - including in food distribution systems.
By Graeme Goodsir
 
The storm so far has caused no upward pressure on meat or livestock prices. Beforehand, weak domestic consumer demand across US had caused fed beef and cattle prices to decline, while good sales through fastfood hamburger restaurant chains (and tight supply of imported lean beef) kept domestic cowbeef prices firm - despite large daily US cow/bull slaughter up to 28,000 head.
 
Total cattle kills today (including cows) fell to 97,000 head - compared with recent norms between 121-124,000 head - but prices actually declined across the board - carcass cut-out values are down today by 1.2c/lb for Choice-grade fed steer (to 135.4c/lb - down 4.2c for whole week) and by 0.3c for canner-cutter cow (to 103c/lb - down just 0.4c for the whole week).
 
Cash prices for fed slaughter cattle over the past week are down by 2 to 3c/lb - to range 79-80c/lb (live basis) - a disappointing slide attributed partly to less office parties & holiday functions in US hotels and restaurants this year. Cattle futures contract prices are also down by like amounts - through to May/June delivery next year.
 
In wholesale trade for processing beef, fresh domestic 90CL boneless cowbeef firmed over past week by 1 to 2c/lb, to be quoted today at 137-138c/lb delivered east coast - while imported frozen 90CL cowbeef is nominally up 1c to 138-139c/lb fob in spot market, and 140c/lb in forward trade. The other key ingredient in ground beef - 50CL fat steer trims - are now at 73c/lb fob (up 5c from week-ago, and 8c from month ago), on tight supply.
 
Arrivals of beef imports from Australia continue to be relatively low, due to falling production there, caused by the high $Aus and poor overall export demand. (Finally, cattle prices in Australia are reportedly now falling, and the nation's largest sheep slaughter plant - at Dubbo in NSW - has just dismissed 300 workers).
 
US national hog kills fell today to 307,000 head (from a norm near 430,000 head on Monday), but the pork carcass cut-out value is up just 2c/lb since Monday (to 66.8c/lb today) - but up a good 4.5c/lb from week-ago, helped by improving export sales to Asia (and also to Aust-NZ - hams for Christmas trade). Domestic ham trade within the US also continued good for Christmas trade.
 
US chicken wholesale markets continued slow during past week, at supply levels near 5% below year-ago, but with signs of slightly improving demand for the New Year. Chicken wing prices continue to be exceptionally good in a range 150 to 160c/lb (as processors build inventories for January festivities when many people have Super Bowl parties, and watch other football games).
 
Leg quarters are firmer - in range of 35 to 40c/lb - attributed to improvements in both export and domestic demand - latter as more Americans learn to like both the taste and lower price of dark chicken meat. The other main chicken meat - boneless breast meat - continues to languish in slow trade at wholesale prices ranging from 120c/lb down to below 100c - depending on geography.
 
Overall, the demand picture for meat and chicken across US continues to look steadily weaker as US unemployment stays at 10% (President Obama says he will give increasing priority to job-creating incentives, but progress will be slow).
 
One local supermarket chain in my area (German-owned Aldi discount group) marked nearly all its prices in this week's flyer with a note in brackets saying "..x..cents cheaper than before". Retail prices for most foods generally have kept easing, causing margin strains. No.1 US supermarket chain Kroger yesterday declared a latest quarter loss of $875 million, on sales of $17.67 billion (up 0.3%). The result becomes a $175 mill. profit, after taking off asset write-downs totalling $1.05 billion - but it was still well below year-earlier profit of $238 million.
 
***For week ending Wednesday 09 December
Click here to receive the latest news - Meat International newsletter

More Processing