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Sow Liquidation-Weekly Slaughter-Storage Stocks to Determine Live Hog Prices

by 5m Editor
22 April 2008, at 12:41pm

CANADA - A Saskatchewan livestock economist expects North American sow liquidation, weekly US hog slaughter numbers and global demand for North American pork to drive live hog prices heading into the summer and the fall, writes Bruce Cochrane.

North American live hog prices started to rebound over the past two weeks but they remain below average. Friday's SPI price for index 100 hogs ranged from 110 to 120 dollars per 100 kilograms.

Brad Marceniuk, with the Saskatchewan Ministry of Agriculture, says key factors affecting hog prices include weekly US slaughter numbers and pork in cold storage.

Clip-Brad Marceniuk-Saskatchewan Ministry of Agriculture

US weekly hog slaughter numbers continue to be significantly higher year over year which has led to increased pork production.

Looking at the March USDA hogs and pigs report, US hog production has been increasing and year over year market and breeding herd inventory numbers are actually up.

Based on these numbers, without liquidation, US hog slaughter numbers could increase by about seven and a half million hogs in 2008 which is up almost seven percent from 2007.

Fourth quarter US hog slaughter numbers could also reach about 31 million head which is a new US record.

So the rate of North American sow liquidation resulting in lower pork production will be key in increasing hog prices.

While the demand for pork continues to remain strong, increased US hog production has resulted in more pork in cold storage.

US pork in cold storage has increased by about 30 percent since December and is actually 25 percent higher year over year.

Likewise we have also seen significant increases in poultry production and poultry in cold storage.

These combined increases have actually resulted in higher total meat in cold storage
.

Marceniuk says, based on the lean hog futures, western Canadian index 100 hog prices could average in the mid 120s in the second quarter and the low 130s in the third quarter.

He suggests, before we get any big increases, we're going to need to see a big increase in demand for North American pork, primarily through the export market, or a large reduction in North American production.

5m Editor