Current Situation and Analysis – 4/12/2024

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Source: Livestock Marketing Information Center (LMIC)

MEAT & DAIRY TRADE

February trade data was released by USDA FAS on April 4th, and USDA ERS provided carcass weight data the following day. Carcass weight trade data for meat and poultry was mixed, but held few surprises. Beef imports were still large up 24% from last year but backed off substantially from the previous month as Brazil shipments fell by more than half the previous month. Brazil tends to export to the U.S. heavily in the first month of the year to fill the quota early. Beef exports were down only 3% and showed promise that the rest of the world is still willing to pay for expensive U.S. beef. Pork exports were up 18%, with strong buying from Mexico and South Korea. Pork imports were also higher, increasing 5% from a year ago. Lamb imports were up 37% from last year while mutton imports fell more than 40%. Exports of lamb and mutton products were negligible.

Broiler exports fell 10% in February, while imports rose 25%. Turkey imports fell 69%, but exports increased 46%. Egg exports of shell eggs and egg products were both up substantially, 29% and 154% respectively. Broilers, turkey, and eggs will likely see smaller exports over the migration season due to country restrictions related to HPAI.

Dairy imports increased compared to last year in all major categories except for whey and natural milk products (0404) which decreased 50% in February.  Fluid milk and cream (0401), concentrated milk and cream (0402), buttermilk (0403), butter (0405), and cheese (0406) imports increased between 5% and 53% apiece. The highest was the concentrated milk and cream category, and the lowest was fluid milk and cream. Dairy exports were similar in that all the categories were above a year ago, save one. Butter exports decreased 29% from a year ago. Further processed dairy products drew particular favor with the buttermilk, cream, yogurt category (HTS 0403) increasing 62% from last year. Cheeses and curds was the second highest up 32% from last year.

CATTLE DRESSED WEIGHTS COUNTERSEASONAL MOVES

Steer dressed weights have been on an upward trajectory for the last eight weeks, creating the most peculiar pattern for this time of year. This week steer dressed weights were 923, 14 pounds below the start of the year and 14 pounds higher than early February. Heifer dressed weights have followed a similar pattern and are sitting nearly even with the heavy weights set at the start of the year of 851 pounds.

Normally fed cattle dressed weights fall, reliably, from January to June and then move up July to November. Some years the seasonal pattern is less pronounced than others, but rarely is the opposite trend seen in cattle dressed weights. At least some of the reason dressed weights are heavier is that marketings have been lower, and the number of cattle on feed over 150 days is higher.  Daily marketings in March are estimated to be in the low 80,000s head per day, a small number given cattle on feed is above a year ago. Cattle on feed more than 150 days reached 2.7 million head in February, resembling numbers seen during the pandemic and post-pandemic supply chain problems.

These higher dressed weights are moderating the impact of smaller harvest levels which are down more than an estimated 5% in the first quarter of 2024, but with 2% higher dressed weights across all classes of cattle, beef production is estimated down only 3.5%.

CPI & JOBS REPORT

The March Jobs report boasted a favorable non-farm employment increase of 303,000 jobs, a 31% increase over the 12 month moving average.  Increases occurred in health care, government, and construction. The average wage for hourly earnings increased 12 cents and over the past 12 months have increased 4.1% in the private sector.

March Consumer Price Index (CPI) data was also released this week. The All-items index rose 3.5% while core inflation (all items less food and energy) increased 3.8% above last year. This is the highest all items CPI increase since September 2023 and had posted a 3.1% or a 3.2% in four of the last five months. Core inflation has been stickier, declining only half a percent in the last eight months. In March, housing, transportation and other goods and services all increased by more than 4% compared to a year ago. Food and beverages increased 2.2% but meats were still higher at 3.4% over last year. Dairy products were one of the few animal-based food categories to decline, down 1.9% from a year ago.

Strong job numbers and wage growth that continues to outpace the Federal Reserve’s inflation target maintains a steady concern that inflation will continue at a higher than 2% level. The Federal Reserve has not raised interest rates since July of 2023, but it also has not eased rates. The latest economic data, at least for the area of jobs growth, wages, and CPI make it unlikely we will see a rate cut in the near future, but also may not offer a lot of support to raise rates either. The next Federal Reserve meeting is April 30th, and there will not be any new economic data in these three areas ahead of that meeting. The next jobs report will be May 3rd, and the CPI data will not be available until mid-month. Our expectations are that the Federal Reserve will hold rates steady in April.

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