CME: Improvement in Cash Pork Prices
US - Lean hog futures were one of the few green spots in a sea of red on Tuesday, report Len Steiner and Steve Meyer.Most agricultural futures
were lower on the day following sharp declines in equity
and energy markets. Grain futures were lower, led by a
reversal in soybean futures. The nearby September soybean
contract was down 86 cents while the nearby corn market
was down 14 cents per bushel. It is sort of odd to see hogs
leading the parade after a lost summer rally and an ever
worse outlook for the fall. Some of the talk in the market
about recent hog gains centered on the apparent strength of
the hog prices in the cash market. The IA/MN lean hog carcass
value (wt.avg) was quoted on Tuesday at $49.46 /cwt,
$1.76 higher than the previous day and $3.73 higher than
the previous week.
Cash hog prices have followed higher prices
for pork at the wholesale level. Gains for some pork
items, especially hams, boosted overall cutout values and
provided some hope that maybe not all was lost for hogs this
fall, hopes that a sudden surge in export orders could boost
packer demand going forward. Indeed, as the charts to the
right show, there was some improvement in cash pork prices
last week, especially with regard to hams. The price of 23-
27# hams rose from around $44/cwt on 18 August to as high
as $65/cwt on 28 August.
Indeed, as the charts below show, there was some improvement in cash pork prices
last week, especially with regard to hams.


The price of 23-
27# hams rose from around $44/cwt on August 18 to as high
as $65/cwt on 28 August. The spike caught many by surprise
and was attributed to a rush of export orders that apparently
cleaned up the spot market and caused domestic end users
looking to fill routine orders to raise bids in order to secure
product. But the ham story is old news at the moment and
looking at the wholesale pork market, it is difficult to get
real excited. Ham prices have declined in the last two days
and the price for 23-27# hams on Tuesday was at $59/cwt,
still a higher than it was two weeks ago but $6 lower than on
Friday. Even more importantly, much of the increase in
overall cutout values was due to the rise in ham prices
rather than a broad based improvement in pork prices.
On Tuesday, the pork cutout value was quoted by USDA at
$54.71/cwt, $3.11/cwt lower than on Monday. In order for the rise in hog prices to be sustained this fall, demand has to
keep up at a time when hog supplies tend to be at the highest point for the year. High cold storage inventories and uncertainty
following predictions of a second outbreak of the flu virus this fall will continue to weigh on pork prices. How
long hog values defy gravity remains to be seen.