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Pork retail prices rebound

by 5m Editor
26 August 2006, at 8:20pm

US Weekly Hog Outlook, 25th August 2006 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

Ron Plain
Ron Plain

Pork prices at retail showed a nice rebound the past two months. Retail prices for pork in July was 2.7 % higher than in May. Retail prices for January - July were 2% below a year earlier. Even though June and July have shown a good response in both retail and wholesale pork prices, the supply of pork per person for January - July is down from a year earlier. Pork production for the first 7 months of 2006 is up 1.6%, but our export growth for pork has used up nearly 2% of production compared to 2005. Therefore, pork consumption per capita for January - July is believed to be down between 1 and 2%.

The marketers and consumers were the gainers with the lower live hog prices. For January - July, live hog prices were 9.9% below a year earlier. The total marketing margin was up 1.6% for these 7 months, and the retailer-processors' margin was up 0.9%, and the packers' margin was up 4.7% from 12 months earlier.

The live hog price would likely have been down 17-20% for January - July without the growth in pork exports in 2006 over 2005.

We appear to be doing the same thing price-wise this year in August as we did last year. Unless hogs weaken substantially in the next week, we will have a higher average price in August than July. Until 2005, we only had higher prices for hogs in August than July when we were reducing production in a cycle. The year 1999 was the last year with hog prices in August higher than July until 2005. In 1999, pork production in August was up 5.1% from July. In 2005, pork production in August was up 16.3% from July. Therefore, we certainly did not decrease production as we moved through the year compared to 2004 in 2005.

Demand for wholesale pork and live hogs have been quite robust for June, July and August. A portion of this strength has been due to stronger chicken prices.

Average hog weights in Iowa-Minnesota gained one pound per hog last week from a week earlier. Weights last week were 1.8 pounds above a year earlier. The odds are low that we have pulled marketings forward in recent weeks.

Cold storage stocks of pork on July 31 were down 8% from 12 months earlier. Belly stocks were down 26% from 12 months earlier. These are positive for hog prices this fall.

This has been another good week for hog prices. Live hog prices Friday morning were $0.50 per cwt lower to $14.50 per cwt higher compared to a week earlier. Weighted average carcass prices Friday morning were $1.81 to 3.82 per cwt higher compared to 7 days earlier.

The top live hog prices Friday morning for select markets were: Peoria $50.00 per cwt, St. Paul $50.50 per cwt, Sioux Falls $N/A per cwt and interior Missouri $52.00 per cwt.

The weighted average negotiated base carcass price by area Friday morning were: western Cornbelt $73.49 per cwt, eastern Cornbelt $72.06 per cwt, Iowa-Minnesota $73.70 per cwt and nation $72.81 per cwt.

Slaughter this week under Federal Inspection was estimated at 2003 thousand head, up 1.3% from a year earlier.

Pork product price per cwt of carcass was up $0.93 per cwt at $76.66 per cwt Thursday afternoon compared to a week earlier. Not bad for a week with slaughter near two million head this week!

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5m Editor