Trilateral Protein Heat Map

Protein Heat Map
Top Butts are the most appealing option in the Beef complex. Whereas pork loins present the most value in the pork complex.

Protein Heat Map Commentary

Best Value Buys

  • Pork Loins are beginning their seasonal rise and are still 13% lower than where they were this time last year.
  • Bellies are 44% lower than they were just 4 weeks ago and entering a bottoming phase.
  • Butter is near unchanged year-over-year. This market is entering a historical, seasonal uptrend that will last until the baking, holiday season.  Trade believes that many end-users are still uncovered for the fall and holiday baking season.  This potentially sets up a very bullish scenario that buyers want to be ahead of versus chasing a market with the herd.


What to Watch for – The Buyers’ Perspective

  • Beef sellers are increasingly motivated to sell current inventories considering their profit levels. After the plant fire prior to Labor Day, beef sellers were able to raise asking prices as buyers feared a shortage. Now that has passed, and current slaughter levels indicate adequate supplies. Consequently, buyers are a little more comfortable sitting back and waiting for prices to come down before re-entering the marketplace. As we approach pre-fire values, look for prices to stabilize in the near term, and rally in the fourth quarter on the back of increased seasonal demand.
  • Chicken Wings, although 20% higher y/y, should maintain some support the next few weeks as the football season begins.
  • As African Swine Fever (ASF) continues to spread throughout Asia the potential demand for US pork continues to increase. South Korean officials Monday confirmed the first case of ASF in that country. South Korea is a net importer of pork so the announcement will have little impact in terms of global supply availability. The real impact will come from the ability of S. Korean officials to contain the disease. The wildcard in this story is if it hits on the CONUS; then, prices should plummet in the immediate as farmers will bring their stock to market to avoid infection, causing a ballooning of short-term supply.