Last week’s International Trade report showed that US beef exports in September marked a fairly typical seasonal decline from August, but were still the largest September export figure on record at 243 million pounds. The September figure takes 3rd quarter exports to 746 million pounds, a 13% increase over last year, and also the largest 3rd quarter export total on record. Cumulative exports for the year are now just over 2 billion pounds, with only 1 other year (2011) having a larger beef export program. The chart shows monthly estimates for the 4th quarter based on the latest USDA forecast that calls for a 4th quarter export total of 745 million pounds. If realized exports for both the quarter and the annual total will be the largest on record, but is needed as beef production through the quarter is forecast to be record large.
Pork exports for the of September were reported at 421 million pounds, or close to 2% more than a year ago, but also the 3rd largest September export figure on record. The September export count puts 3rd quarter pork exports at 1,230 million pounds, slightly less than the USDA projected in September and about 5 million pounds less than a year ago. Cumulative pork exports for the year amount to just over 4 billion pounds, and are up 8% year over year, while the USDA forecasts annual exports will be 9% larger than last year. Monthly estimates for the USDA’s 4th quarter forecast of 1,550 million pounds are reflected in the chart, which if realized will be the largest Oct-Dec export total on record. Red meat prices have been exceptionally strong through the 1st month of the quarter (relative to production) and we expect that strong export figure will be confirmed in upcoming trade reports.
The USDA will update red meat and poultry supply and use estimate on Thursday. Historically, 1st quarter pork production estimates have changed very little between October and November, as the October estimates have already been adjusted to reflect the results of the September hog inventory report. The October WASDE estimated 1st quarter pork production at 104% of 2017, at 6.64 billion pounds, with domestic per capita disappearance at a 14 year high of 12.7 Lbs. Based on the increase in supply, the price model in the chart suggests an average 1st quarter lean hog price of $56. The USDA’s own live hog price forecast of $45-49 implies an average lean value of $64, while the CME today is offering producers a quarterly average near $72. Strength in pork/hog prices in recent months has reflected exceptionally strong demand. However, given current prices, we continue to advise forward sales on rallies.
