Source: Chris Scott, MEATINGPLACE, 10/6/15


U.S. processing margins for beef and pork rose last week while chicken margins slipped, according to the latest Weekly Commodity Monitor compiled by Stephens Inc. analyst Farha Aslam.

Beef
The average processing margin for beef last week averaged $133.69 per head, higher than the $126.28 margin in the previous week and significantly higher than the loss of $22.78 per head reported in the same week one year ago. Cattle slaughter was down 1 percent versus last year, while beef production was 1.6 percent higher year over year, Aslam reported.

She also noted that the Trans-Pacific Partnership (TPP) trade agreement opens up agricultural markets in Japan and Canada and will lower duties and standardize many trade laws for the 12 participating countries. For example, TPP is expected to reduce Japan’s import duty on beef to 27.5 percent from 38.5 percent when enacted and set the stage for a further decline to 9 percent over the next 15 years, Aslam reported.

Pork
The U.S. pork processing margin moved higher to an average of $24.58 per head last week versus $23.61 in the previous week, Aslam reported. The most recent average margin was lower than the $25.95 figure posted in the same period one year ago, with hog slaughter up 8.9 percent from last year.

Regarding TPP, Aslam noted that Japan’s import gate price is expected to be phased down to 50 yen per kilogram over the next 10 years from the current 482 yen per kilogram. The short-term impact, however, is expected to be minimal, she added. Export pressure against U.S., Canadian and Brazilin hog markets also are expected to continue in the near term, Aslam predicted, based on lower prices for European Union hogs.

Chicken
Chicken margins slipped 2 cents compared with the pervious week to two cents per pound, Aslam reported. The chicken margin last year was 17 cents higher per pound in the same week last year. Boneless skinless chicken breast meat prices were down 7 cents compared with last week at $1.09 per pound and 43.1 percent lower than in the same week in 2014. Wing listed prices were down 1 cent versus last week at $1.53 per pound and 3.8 percent lower than one year ago.

Aslam added that TPP implementation could phase down Japan’s import poultry duties to zero from the current rates of between 8.5 percent and 11 percent. She added that TPP should not have a significant impact on trade in the near term, especially since more than 40 export bans on U.S. poultry currently are in place in the wake of this year’s avian influenza outbreaks. That situation has caused downward pressure on leg quarter prices, she added.

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