CME Group live cattle futures settled higher Thursday as technical short covering overran the bearish effects of a USDA World Agricultural Supply and Demand Estimates report that increased 2018 estimated red meat and poultry production from a month ago.
The 2018 beef production forecast was raised to 27.150 billion pounds from 27.125 billion on higher expected third-quarter cow slaughter. A better look at this might come next Friday as the midyear Cattle Inventory report could show producer intentions regarding retention of heifers for beef cow replacement.
Forecast 2018 pork production was raised to 26.745 billion pounds from 26.715 billion last month as higher expected second-half hog slaughter more than offsets lower second-quarter slaughter. A more rapid pace of hog slaughter was expected in the third quarter, and the USDA’s Quarterly Hogs and Pigs report estimated the March-May pig crop was 4% above 2017, which likely will result in higher fourth-quarter hog slaughter.
Second- and third-quarter 2018 broiler production was raised to 42.495 billion pounds from 42.450 billion on recent hatchery data and expected heavier bird weights.
2019
For 2019, the red meat and poultry production forecast was raised as expected increases in pork and broiler production more than offset expected declines in beef production.
Forecast beef production next year was reduced from the June report on lower expected steer and heifer slaughter during the first half of the year.
The 2019 pork production forecast was raised as the Quarterly Hogs and Pigs report indicated that producers intend to farrow 2% more hogs over the next two quarters, which, coupled with expected growth in pigs per litter, will push first-half hog slaughter higher.
Forecast broiler and egg production also was raised from June, as higher prices and lower expected feed prices support continued expansion.
TRADE
The 2018 beef import forecast was unchanged, but the export forecast was raised to 3.070 billion pounds from 3.050 billion in June on recent trade data and continued strong exports to Asia.
The 2019 beef export forecast also was raised from last month.
Pork trade forecasts for 2018 and 2019 were unchanged from the June report. Lower pork product prices were expected to help offset increased competition in key markets in 2019
No change was made to 2018 and 2019 broiler and turkey export forecasts.
PRICES
The cattle price forecast for 2018 was lowered slightly from last month, reflecting June price data.
Forecast 2019 cattle prices were unchanged from June.
The hog price forecast for 2018 was raised as recent price strength and expected higher prices in the third quarter more than offset lower prices in the fourth quarter.
The hog price forecast for 2019 was lowered on increased supplies of pork.
Broiler prices were raised for 2018 on current price strength.
No changes were made for 2019 broiler and turkey price forecasts.
CATTLE, BEEF RECAP
No cattle traded on the Livestock Exchange Video Auction Wednesday. Fed cattle sold two weeks previous at $106 per cwt, down $4 from the prior Wednesday.
Cash trade was reported this week at $110 per cwt on a live basis, down $2 to $4 from last week and at $175 per cwt on a dressed basis, steady to up $2 from last week.
The USDA choice cutout Wednesday was up $0.12 per cwt at $207.44, while select was off $1.25 at $197.14. The choice/select spread widened to $10.30 from $8.93 with 88 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $145.08 per cwt, down $1.67. This compares with Wednesday’s Aug settlement of $149.40, down $2.45.