Newsletter

Processing

rss

Weekly North American market update 15 Jan 2010

Apart from a 20% reduction last Friday in national cattle slaughter, daily beef and pork kills stayed near full capacity around 126,000 head of cattle (incl. 26-27,000 cows + bulls) and 430,000 hogs.
Weekly North American market update
From the demand side of the US marketplace, it seemed like the cold weather stimulated appetites this week - amid serious ongoing recession pressures - and boosted sales to cash-strapped American consumers of lower-priced meats (specially ground beef and some pork cuts).  The strong sales of ground beef include more retail momentum, as well as through fast-food restaurants.  Beef grinders reported continuing full-capacity business (6-day weeks), with adequate supplies of fresh domestic 90CL cow-beef. However, paying more for it - up to 152c/lb mid-west, or 158c delivered to east coast plants - 4c above week-ago, and getting toward a 155c/lb ceiling that MICA economist Len Steiner had suggested might become possible into 2010. 
  
Usage of imported frozen 90CL cow-beef continued to be restricted by tight supplies, but fob prices increased - with sales reported up to 149-150c/lb - up 4 to 6c from week ago.  Other sales of imported lean beef included 95CL bull 158c/lb, 85CL cow fores 138 to 140c,  80CL trims 126c (now asking 130) and 85+CL shank-beef 144c - all much-improved levels since week-ago.
  
Fed beef also had price gains this week.  The Choice-grade carcass cut-out value rose 6c to 145.4c/lb (and Select-grade also rose 6c to 139.9c/lb) on what may be temporary stimulus after last Friday's low kill. Packers had positive margins last week, which now should be boosted because live slaughter steer cash prices stayed fairly steady all week (now quoted in a range of 83-85c/lb, with 35,000 head changing hands today in 3 major feedlot regions).  Futures contracts for fed slaughter steers are also steady, in a range today of 85.7 to 90.0c/lb.  Feeder calf futures contract prices rose 1c this week, ranging today from 97.3 to 99.4c/lb, live basis. Pork wholesale prices also rose this past week, with slaughter levels maintained (despite some hog auction markets being closed by weather). 
  
Pork carcass cut-out is quoted today at 72.6/lb - up 4.6c from week-ago, and highest in a long while.  Lean hog futures contract prices are up a cautious 1.5c - ranging  69 to 77c/lb, up to May 2010 delivery date. Future export trade looks good for US pork - particularly to Mexico and Asian markets - and there is optimism starting to return to producer attitudes - as there is to dairy producers. The latter were encouraged by USDA announcing a large one-time grant to be shared among individual dairy farms, with a cap limit that means small farms benefit more than bigger ones.
  
Sams Club food warehouse chain (a Wal-Mart subsidiary - competing against Costco and BJ's Stores) announced this week it will close 10 unprofitable stores nationally (to "trim costs", with 1,500 workers laid off), while planning to open 6 new stores in other locations.  Five of the store closures will be in California state, where the UK Tesco chain is building new food stores based on a "small store" model.
  
Supervalu national supermarket chain (which includes Albertsons stores) also announced today that it will reduce the number of items it offers per-store - in some cases by as much as 25% - in a move intended to more-prominently feature store-branded items, and to extract lower prices from vendors, and to reduce overall investment in store inventories.
Click here to receive the latest news - Meat International newsletter

More Processing