CME: US Broiler Export Data Surprises Analysts

US - USDA-ERS released March monthly live animal and meat (on a carcass weight basis) trade numbers last week, write Steve Meyer and Len Steiner.
calendar icon 11 May 2016
clock icon 4 minute read

In the beef complex, imports continued to track below year ago levels, down 16 per cent for the month of March, compared to 2015, and down 9 per cent year-over-year for the first quarter.

The majority of this decrease in beef imports stems from fewer imports from Australia.

Beef imports from Australia were down 18 per cent for the first quarter compared to 2015. Beef export volume was even with year ago levels for March. This put first quarter beef exports up 1.5 per cent compared to 2015.

Within our major trading partners, beef exports have gained ground in Japan and South Korea, up 6 per cent and 17 per cent, respectively, for the first quarter compared to 2015.

Conversely, beef exports to Canada were down 9 per cent and down 11 per cent to Mexico for the first quarter, compared to last year.

The general improvement in beef exports is good news for the industry, but the majority of export improvement should take place the second half of 2016, as it will be compared to the significantly reduced export levels during the second half of 2015.

Moving on to the pork exports, year-over-year gains continue to be made. March export volume was 3 per cent above year ago levels, and first quarter was up 5 per cent from 2015.

Pork exports to Canada and Mexico continue to struggle. For the first quarter, exports were down 2 per cent to Canada and down 9 per cent to Mexico year-over-year.

Additionally, first quarter exports were down 29 per cent to Taiwan and down 30 per cent to South Korea.

However, Japan, Mainland China, and Hong Kong have stepped up their buying levels. Compared to 2015, first quarter pork exports were up 14 per cent to Japan, up 255 per cent to Mainland China, and up 48 per cent to Hong Kong.

Pork import levels in March were down slightly year-over-year, but for first quarter total imports were up 6 per cent compared to 2015.

Broiler exports were probably the most surprising and disappointing aspect in this trade report.

March exports were down 10 per cent compared to 2015 and this put first quarter exports down 3 per cent year-over-year.

By country, first quarter exports were actually up 3 per cent to Canada and up 31 per cent to Iraq. However, fewer exports to Mexico (down 2 per cent), Hong Kong (down 31 per cent), and Angola (down 10 per cent) overcame any improvement made in Canada and Iraq.

This broiler export trend is interesting, as domestic leg and leg quarter prices have recently experienced a decent price rally which was thought to have stemmed from improved export levels.

Switching topics, the cattle market experienced another rollercoaster week. The Choice cutout gave up $10 per cwt. on its weekly average compared to the previous week.

The 50 per cent lean trimmings price declined almost 20 per cent week-to-week, or down over $10 per cwt. However, volume movement of Choice and Select boxed beef cuts were both the largest since October of 2015, on a weekly basis.

Kill levels are estimated to be the largest (590k) since August of 2014, and it looks like fat cattle are being cleaned up nicely as steer dressed weights dropped 8 pounds week-toweek during the end of April.

On a high note, feeder and live cattle futures ended the week up with a significant rally in the June Live Cattle contract.

On the pork side, USDA is estimating larger slaughter levels for last week, up 3.5 per cent from the previous week.

Slaughter hog prices experienced increases last week, this is seasonally normal for the market.

Broiler production was down 1.7 per cent week-to-week, and combined with a decrease in bird weights, ready to cook (RTC) production was down almost 3 per cent week-to-week.

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.