Dr. Derrell Peel Says Meat Markets Are Hotter than Summer So FarTue, 01 Jun 2021 07:48:36 CDT
Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Mark Johnson. Today, Dr. Peel talks about the Super hot meat markets.
Protein markets are red hot. With the economy opening up and growing rapidly, meat markets of all types are enjoying strong demand. In numerous cases, wholesale prices for specific meat products are at record levels, exceeding the levels provoked by the pandemic disruptions one year ago; and unlike last year, lack of supply is not the issue. Year to date production of beef, pork and broilers is higher, not only compared to last year but also higher than 2019 levels.
Broiler breast meat price has been at record levels in May, fueled no doubt by the chicken sandwich wars in quick service restaurants (QSR). Chicken leg and leg quarter prices have risen sharply since the beginning of the year. It is likely that export demand is helping to drive these markets. Chicken wing prices did not drop after the “Super Bowl Bump” but have continued to increase to record levels, passing the $3/lb. mark for the first time in the last month.
Wholesale pork carcass cutout prices have risen steadily all year, pushing past the levels of the pandemic spike last year to the highest values since 2014. Pork tenderloin prices have increased since the beginning of 2021 but have remained below the pandemic levels of one year for several weeks. Wholesale ham prices increased from the first of the year until late April and have retreated slightly in the past month. Hams are a popular export item and pork exports jumped sharply in March. Pork belly prices peaked recently in April at the highest levels since 2017. Pork spare rib prices reached record levels recently, pushing above $3/lb. for the first time. Spare ribs are often exported but the recent strength in spare rib prices may also be related to a rebound in BBQ restaurants. Pork cold storage holdings were drawn down sharply one year ago and remains at very low levels. In part, this is likely due to the surge in pork exports to China that began in 2019 and resulted in China being the largest pork export market in 2020.
The boxed beef cutout price has pushed higher since the beginning of the year. Middle meats have led the way with wholesale beef tenderloin and ribeye prices setting new records in the most recent data with tenderloin over $17/lb. and ribeye over $13/lb. Tenderloin is almost exclusively a restaurant item while ribeye is popular in restaurants, at retail grocery and for export. Strip loins are very popular at retail grocery and prices have also increased sharply this year but failed to exceed the pandemic levels from last year. Brisket prices have increased dramatically since January, averaging over $7/lb. in May; another indication that BBQ is back. Chuck and round products are higher, though less so than the middle meats. End meat demand is driven by retail grocery use for value cuts and for ground beef, as well as export demand. The price of 50 percent trimmings is higher compared to January but has dropped back from recent peak prices in mid-April. The supply of fatty trimmings is relatively large due to increased slaughter of heavy fed cattle. The price of 90 percent lean trimmings remains strong with high demand for lean to match supplies of 50s. Trimming are mostly used for food service ground beef.
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