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CME: Export Sales Somewhat Disappointing for Beef

01 January 2020

US - An update provided by Steiner Consulting Group, DLR Division, Inc. states that livestock futures traded regular hours on 31 December. Market was closed for New Year’s. Tomorrow (Thursday) will be regular open and close.

At the bottom of this page, please find the update price and production summary for the previous week. This will be the last summary table for 2019, but please keep in mind that many of these numbers are preliminary, official December statistics will be published in January, allowing for a more complete statistical review of 2019 supply and price performance. Below is a brief recap of some of the latest statistics and implications for markets at the start of 2020.

For beef and pork, holidays, especially when they fall in the middle of the week, tend to cause a lot of disruptions for both packers and end users. Foodservice operators will likely wait to see how sales develop over the two holiday weeks before they step back in the market to shore up their positions.

This is an extremely busy time for retailers while processor demand tends to taper off due to reduced shifts and the need to juggle available labor. This is an important consideration when looking at some of the wholesale prices printed in the USDA reports.

The pork belly primal last night closed at $81.94/cwt, far lower than anyone would have expected back in October and November. Ample freezer inventories and processors running reduced hours have put a lot of pressure on this item.

Normally belly prices recover in January as slaughter numbers seasonally decline and processors run full shifts to support retail features. But what continues to bedevil the pork belly market is the disconnect between forward prices and a spot market that is invariably oversupplied.

On the beef side, export sales have been somewhat disappointing, especially considering the lower tariffs in Japan and higher prices from our competitors. Domestic beef demand in the short term should remain in good shape, driven by a robust economy, low unemployment and higher consumer incomes.

But that does not preclude ongoing volatility, especially following the dramatic run-up in prices last November. The value of end cuts will be critical for the cutout in January. Forward beef sales for the 22-60 day window are currently running 13 percent under last year, suggesting a bit of a slow start to the year on the retail end.

Weather remains a wildcard for cattle this time of year and for now packers have had to pay up to secure cattle, with prices last week as high as $124/cwt.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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