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US Markets Show Strong Meat Demand

11 December 2014

US - Markets continue to indicate and the data continue to support the existence of strong meat and poultry demand — at least through October, writes Steve Meyer and Len Steiner.

That is our conclusion after including Friday’s export/import data in our calculations of US domestic per capita availability/disappearance/consumption for October.  

Those numbers for each species, of course, are key items in determining the status of demand for each species and the news was good once again.

Real per capita expenditures (RPCE) for the four major species dipped slightly from October but remained above $49 in year?2000 dollars last month.  

As can be seen at right, that number is 6.8 per cent higher than one year ago and pushes the year?to?date total to more than four per cent higher than in 2013 at this point.   

We should note that this calculation, if anything, understates the actual figure because we use USDA’s retail whole?bird turkey price since it is the only retail turkey price that is available. 

Based on wholesale turkey part prices this year, we are confident that a composite retail turkey price made up of breasts, drumsticks, ground turkey, etc. would make this year’s RPCE calculations look even better.   

While pork has seen the most consistent year?on?year gains this year (more on that later), the recent demand star has been beef.  

Note that we include a RPCE chart for All?Fresh beef today.  

We have used the Choice beef price in our calculations in the past but we believe the All?Fresh price is more indicative of the total beef market since it includes Select and store grade product as well as the higher?quality Choice items.  

As can be seen, October was another strong month for All?Fresh beef with RPCE coming in 14 per cent higher than one year ago, pushing the year?to?date figure to +6.1 per cent .   

Choice beef has definitely carried its share of the load this year as RPCE for that narrower category was up 10.9 per cent in October and is 5.7 per cent higher year?to date.  

Extremely strong beef prices are the key indicator of stronger beef demand and they show little sign of weakening. 

Strengthening macro economic factors (321,000 new/replaced jobs in November!) and lower gasoline prices have kept beef demand strong since October and will likely continue to do so.

The "steady?Eddy" species for demand this year has been pork and that continued in October when RPCE was 9.6 per cent higher than one year ago. 

It brings the YTD figure to +7.4 per cent .  

Further, October’s pork RPCE of $13.02 year?2000 dollars marks the first time since 1991 that this measure has exceeded $13 — and November is usually the high?water mark for the year! 

Some pressure on wholesale trimmings and ham prices since 1 November has some participants questioning whether demand has remained strong but we think the magnitude of the cut price declines is pretty normal for this time of year as hog numbers increase seasonally.  

Will November’s RPCE growth slow?  Probably — but simply because a +10 per cent pace strikes us as VERY DIFFICLT to maintain.

RPCE for chicken continues to trail year?ago levels but was closer in October than at any time since June. 

October’s –1.8 per cent puts the year?to-date change for chicken RPCE at –0.9 per cent . 

The culprit is real retail chicken prices which have lagged year?earlier levels by three per cent or more since May.

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

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