COMMODITIES

Competitive Commodity Insights: Time to get your grill on!

It's time for summer grilling. Here's a commodity outlook

Just ahead of the kickoff to this year's summer grilling season, the U.S. Department of Agriculture published red-meat and poultry production forecasts for 2017 predicting production of all animal protein components is expected to increase next year vs. this year. Overall, total red meat production should rise 3.3 percent, total poultry will grow 2.5 percent, and the total for both categories combined should rise 2.9 percent.

All meat production is expected to rise

Beef

Now's the time to take advantage of beef featuring through June and July. USDA reports cattle prices are moving lower and supplies of cattle remain large. Given a larger 2015 calf crop and expectations of increases in the 2016 calf crop, the number of cattle going into feedlots in preparation for market in 2016 and early 2017 are expected to be higher. Those larger slaughter-cattle supplies and higher average carcass weights add up to more beef production for 2017—4 percent more than 2016, at a forecast 25.8 billion pounds. Those increasing beef supplies have kept wholesale beef prices under pressure. Weak demand for ground beef products and the popular middle-meat grilling items amid expanding weekly beef production remain a negative force. USDA reports the Choice cutout price for the week ending May 6 was $205.72 per hundred pounds, down $9.79 from the previous week and $50.89 lower than last year. The Select cutout was reported at $196.49 per hundred, down $9.82 from the previous week and $48.40 below last year. The current fundamentals of the beef complex are the exact opposite of this time last year, with lower prices and higher production.

Beef price trends

 

Pork

Larger hog supplies will drive 2017 pork production almost 3 percent above volumes in 2016, according to USDA. Retail pork prices are likely to be lower as a result. They will be pressured by larger animal-protein supplies, not only of pork products, but of meats that compete with pork; beef and poultry production are also expected to increase in 2017. The ERS retail pork composite is expected to average in the mid-$3 region next year, down about 4 percent from the retail composite forecast for 2016. The wholesale value of January-to-April production averaged $76.20 per hundred pounds, almost 5 percent more than in the same period a year ago. In effect, this year, the wholesale market valued roughly the same volume of pork 5 percent higher than a year ago, suggesting that wholesale demand increased.

Pork price trends

 

Chicken

First-quarter broiler production was slightly below forecast, and outlying forecasts were left unchanged. Broiler stock forecasts were reduced on lower-than-expected data, and whole-broiler price forecasts were raised slightly on stronger price trends. USDA reports April wholesale prices for broiler meat were mostly trending up, led by leg quarters, but they remained relatively low. The national composite price for whole birds at wholesale reached its seasonal low during February and has increased fairly consistently since then. With a relatively strong increase in prices during April and May, the whole-broiler price forecast was raised for the rest of 2016, with an annual average of $0.86 to $0.90 per pound. The 2017 price was forecast to average $0.84 to $0.91 per pound, as expected growth in exports partly offsets the effects of increased production.

Poultry price trends

 

Lamb

First-quarter Choice slaughter lamb price was $133.33 per hundred pounds, almost $14 lower than the same time last year. Prices are expected to continue to remain below year-earlier levels for the rest of 2016, primarily due to the expected increase in the supply of lamb on the market. Second-quarter commercial production is also forecast at 38 million pounds. Both the first and second quarter commercial lamb production was below last year’s 39 million pounds when Easter and Passover occurred around the same time in the second quarter. However, overall 2016 production is expected to be slightly higher than last year.

Lamb price trends

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