The nearby lean hog futures closed the week at $76.9 /cwt, almost 200 points higher than a week ago and about 600 points higher than where it was in early July.

Strong exports continue to boost US pork values. The May report showed that pork exports for that month just about doubled compared to the previous year and current prices for some key items point to very strong export sales in June and July. Despite hog slaughter for the week at 2.145 million head, 9.5% higher than a year ago, the pork cutout was $82.3 /cwt for the week, 9.3% higher than a year ago, an indication that pork demand is very strong.

While prices for a number of pork items are up significantly compared to a year ago, much of the support for the pork cutout is coming from two items, pork trimmings and hams, items that are in great demand in a number of growing export markets.

Ham prices for the week were as much as 47.3% compared to the average July price a year ago (heavy ham price) while pork trimmings were up as much as 54.9% (fat trim, comparison vs. July 2007 avg. price). The strength in ham and trimming prices bodes well for the pork market later this year. Much of the speculation among market analysts has centered on the apparent dichotomy between relatively high futures prices for Q4 of this year and the expectation for all time record supplies.

Last summer, we questioned whether the premiums we were seeing in the market for the fall and winter were sustainable given the weak performance of ham prices at the time, an item that generally is counted on to carry overall pork values during the holidays. This year, the situation appears to be significantly different and, if current export levels are maintained, we could see hog prices hold up much better than many expect, even with record pork output.

Cattle prices were lower for the week but remain much higher than year ago levels. News that S. Korea has resumed importing US beef failed to generate much enthusiasm as the market will probably need to see more than a few weeks of uninterrupted trade before it begins to incorporate this factor into its overall assessment of beef export demand for later this year.