US Pork Outlook Report - November 2009

Wholesale pork prices showed signs of life in early November, according to Kathryn Quanbeck and Rachel J. Patton from the USDA Economic Research Service (ERS) in the November 2009 Livestock, Dairy and Poultry Outlook.
calendar icon 17 November 2009
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USDA raised fourth-quarter prices of live equivalent 51-52 per cent hogs to $36 to $38 per hundredweight (cwt), on tightening supplies of animals from a lower spring pig crop and sharply lower imports of live Canadian swine. Third-quarter US exports were 1.02 billion pounds, 10 per cent below the same period a year ago. Imports increased 10 per cent compared with the same period last year, and imports of live Canadian hogs and pigs – off more than 31 per cent – continued to trend downward as sector contraction in Canada continued.

Modest Upturn in Hog Prices, Wholesale Pork Prices

A slightly smaller 2009 spring pig crop and continued sharply lower live imports of Canadian swine are likely causing fourth-quarter hog prices to strengthen at a time of year when prices typically achieve their annual lows. October hog prices typically drop-off substantially from September’s but this year, the October price of live equivalent 51-52 per cent lean hogs was $37.65 per cwt, slightly higher than the September price. Moreover, hog prices finished the second week of November at $39.99 per cwt. Accordingly, USDA raised the fourth-quarter estimate of 51-52 per cent live equivalent lean hogs to $36-$38 per cwt, up from $34 to $36 per cwt.

Wholesale pork prices also appear to be showing signs of life in early November, after months of virtual flatlining. The figure below shows that wholesale prices typically decline from September through November, before leveling out in December. As with hog prices, early November wholesale pork prices are moving contra-seasonally. Led by higher wholesale ham prices – likely reflecting Christmas and export demand, and just slightly higher September 30 cold stocks – the USDA carcass cut-out averaged $58.31 per cwt in the first two weeks of November, moving past October’s average of $55.23 per cwt. Prices of butts and picnics also helped to push wholesale prices above earlier autumn levels, perhaps also a reflection of year-over-year lower cold stocks at the end of September, and increased export demand. Bellies and trim are also moving higher than earlier in the season.

Monthly wholesale pork carcass cutout values, 2008 and 2009*
* Through 13 November 2009.
Graph: USDA, Agricultural Marketing Service

While somewhat stronger fall prices for hogs and wholesale pork are good news in a year where sector optimism has been all but absent, sub-$40 live hog prices still fall substantially below most producers’ break-even thresholds. Futures markets for corn and soybean meal currently suggest that for the balance of this year, and well into 2010, producers need hog prices of $50+ per cwt to break even on feed costs alone. Producer returns calculations from Iowa State University, indicate that hog producers lost $36.41 per head in October. Some combination of lower supplies of hogs and pork and increased domestic and foreign demand for pork products is necessary for renewed sector profitability.

Third-Quarter Exports Off by 10 Per Cent

Third quarter US pork exports, at 1.02 billion pounds, were 10 per cent lower than the same period last year. The current global recession is likely the primary factor behind slower exports. In most major US markets abroad, lower incomes and higher unemployment translate into less demand for US pork. It is interesting to note, however, that despite the negative tone of exports so far this year, several foreign markets are bucking the tide: Australia, Taiwan, the Philippines and the Dominican Republic are among the top-10 US pork importing countries in the third quarter.

US pork exports: ten largest markets for third quarter 2009
Country Export volume
(million lbs.)
Export volume
(million lbs.)
Per cent
Third qtr.
Third qtr.
World 1,016 1,126 -10
1 Japan 300 341 -12
2 Mexico 243 177 37
3 Canada 106 113 -6
4 Russia 92 129 -29
5 China/Hong Kong 88 140 -37
6 S. Korea 40 62 -35
7 Australia 30 18 67
8 Taiwan 24 18 30
9 Philippines 16 15 7
10 Dom. Republic 10 6 65
Source: USDA, Economic Research Service.

Pork Imports Higher Than a Year Ago; Live Imports Off by More Than 30 Per Cent

Third-quarter US pork imports of 210 million pounds were 10 per cent higher than third-quarter 2008. Imports from the two largest foreign sellers – Canada and Denmark – were both year-over-year larger. Imports from Canada were 14 per cent above a year ago, while Danish imports were five per cent above third quarter 2008. Imports, particularly from Canada, may be benefiting from lower US pork production. Imports of live swine from Canada, on the other hand, were off by more than 31 per cent in the third quarter, compared with third-quarter 2008. Ongoing pork sector contraction in Canada makes fewer animals available for export. Negative returns from swine finishing in the United States, along with labelling issues confronting US packers, serve as disincentives to import live Canadian swine.

Further Reading

- You can view the full report by clicking here.

November 2009
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