Sort & Cull

I'm not sure how we got here, but the conventional calendar of events and outdoor activities is telling us that "summer 2017" has virtually come and gone. The long Labor Day weekend traditionally marks the grilling season's last hurrah, and many DTN readers have no doubt already slipped into eleventh-hour vacation gear.

It goes without saying that the year's last warm-weather holiday generated intense competition between sellers of beef, pork and chicken. Indeed, it constitutes a major feature war, a late-season battle intensified by the fact of enormous levels of total meat production.

The question of commodity dominance over the next three days looms large. When the sun sets on Monday, which cut of meat will have blackened the most grills? While I'm not sure such an interesting question can be satisfactorily answered, perhaps a brief review of wholesale market behavior through the month of August could at least help prioritize the possibilities.

Starting with the late-summer beef trade, the composite cut-out fell roughly $11 from late July through the end of August, a decline of 4-5%. During that time period, commercial beef production exceeded 2016 by right at 2%.

Following similar market dynamics, the national broiler price decreased approximately $8.80 through the entire month of August, a 30-day discounting of nearly 9%. Yet late-summer chicken tonnage held very close to the production seen at the same time last year.

But it would appear the crashing wholesale trophy goes to the pork complex. From late July to the eve of Labor Day, the pork carcass value stumbled no less than $16, a drop of nearly 16%.

Generally speaking, commercial pork production through the period surpassed that of the prior year by approximately 3%.

If savvy retailers and food managers were exclusively focused on profit margins when they put together the Labor Day feature last month, they would have most certainly weighed the total meat buy in favor of pork. Of course, I'm assuming (rather safely) that retail prices adjust on a much smaller curve than their wholesale counterparts.

Needless to say, there will be plenty of backyards socked in through the weekend ahead by thick smoke from T-bones, hamburgers and chicken breasts. Yet when you take an honest look at August numbers (i.e., both in terms on increased production and decreased price), don't you have to bet that the meat case on Tuesday morning will be begging for more chops and ribs?

For more of John's commentary, visit http://feelofthemarket.com/…

(AG)

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