Weekly Review: Cycle in Pork Demand Observed

US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 28 February 2009
clock icon 4 minute read

Retail pork prices in January were down 0.3 per cent from December but up 4.9 per cent from a year earlier. Live hog prices in January were 12.7 per cent above 12 months earlier.

All segments of the pork industry benefited from the nearly five percent increase in retail pork prices in January. However, in late January and so far in February packers’ margins have been very undesirable with deep red ink part of the time.

Surprising as it may seem to be our demand index for November 2008 through January 2009 shows about a two percent increase in pork demand and above a one percent increase in live hog demand.

There appears to be a cycle in pork demand and the rate of decline in demand was decreasing through fall.

Certainly, three months is not a long enough period to project a trend; but with the weak general economy, we will take stronger demand for any length of time we can get it.

Our gilt and sow slaughter data continues to support the belief that producers have stopped the decline in the size of the hog breeding herd. Some observers of the hog industry believe we need to reduce the herd another five percent or about 300 thousand head. To get this much more reduction will take some time and producers are likely to feel substantially more pain in accomplishing this goal.

Feeder pig prices at United Tel-O-Auction this week were steady to $5 per cwt below two weeks earlier. United only had pigs in the 50-60-pound category this week and they sold for $107 per cwt.

The national average price last week for early-weaned pigs 10-pound basis sold for an average of $37.72 per head. The national average for 40-pound basis pigs was $55.45 per head. I would still rather be the seller than the buyer at these prices.

Pork cutout was pushed lower again this week with the cutout Thursday afternoon at $56.67 per cwt, down $0.65 per cwt from seven days earlier. Loins at $71.97 were down $0.09 per cwt, Boston butts at $60.91 were down $2.84 per cwt, hams at $40.65 per cwt were up $0.62 per cwt, and bellies at $71.26 per cwt were down $1.00 per cwt from a week earlier.

Live barrow and gilt weights for Iowa and Minnesota continued the seasonal decline at 262.4 pounds, down 0.8 pound from a week earlier but still 0.6 pound above a year earlier. Barrow and gilt carcass weights under Federal Inspection for the week ending February 14 were still two pounds above a year earlier.

This weight data supports the belief that the larger marketings than expected in the last few weeks are not due to pulling marketings forward. Based on weights, marketings have slowly become less current in the last six months.

Live hog prices Friday morning were $2.50 - $4.25 per cwt lower compared to a week earlier. Weighted average negotiated carcass prices Friday morning were $2.79 – $4.66 per cwt lower compared to seven days earlier.

The top live prices Friday morning for select markets were: Peoria $34 per cwt, Zumbrota, Minnesota, $36 per cwt and interior Missouri $38.75 per cwt. The weighted average negotiated carcass prices Friday morning were: western Cornbelt $54.21 per cwt, eastern Cornbelt $51.07 per cwt, Iowa-Minnesota $54.21 per cwt and nation $51.84 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,179 thousand head, down 0.5 per cent from a year earlier.

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