Market Preview: Good News for Pork

US - Weekly US Market Preview provided by Steve R. Meyer, Ph.D., Paragon Economics, Inc.
calendar icon 2 March 2010
clock icon 5 minute read

USDA’s Cold Storage report, released last week, continues to indicate that supplies are at least “current” at present. The cold storage data appear in Table 1.


Total meat and poultry in freezers amounted to 1.86 billion pounds on 31 January. That was 3.5 per cent higher than one month earlier, but 17.1 per cent lower than one year ago. All four of the major species contributed to the decline with turkey leading the way in both pounds (169 million) and percentage (-37.5 per cent). Pork was second in both categories, trimming total freezer stocks by 111.3 million pounds and 18.3 per cent vs. one year ago. Chicken stocks continued to fall as well, declining 10 per cent or 69.1 million pounds from 31 January 2009.

USDA estimates that there were 495.6 million pounds of pork in freezers on 31 January. That is 5.2 per cent more pork than one month earlier and it represents the first month-to-month increase in pork inventories since last April. That is a very unusual circumstance, since pork stocks usually begin growing in September and swell in the fall of the year when hog numbers are high. The counter-seasonal decline in stocks last fall leaves supplies quite current as we go into spring and expected lower slaughter runs. That factor should be supportive of pork and hog prices.

Freezer inventories of every pork cut except ribs and butts were lower than one year ago. Ham inventories were down 15.4 per cent (13.5 million pounds), while belly stocks were 22.5 per cent (15.58 million pounds) lower. As with most months, the “other” and “unclassified” categories accounted for some of the largest actual inventory numbers but, again, both declined sharply (by 22.9 and 26.8 per cent, respectively) relative to last year.

Chicken companies continued to keep freezer stocks low relative to historic levels and they were roughly steady relative to 31 December. One concerning number is leg quarters stocks that grew by roughly 27 million pounds (23.2 per cent) during January as the United States and Russia wrangled over Russia’s decision to block imports of US chicken due to our use of chlorinated water in processing. While stocks grew during the month, leg quarter prices have been remarkably steady indicating, in my opinion, that the “market” expects a solution to be reached.

Finally, last week marked the first week since Christmas that actual federally inspected (FI) hog slaughter was as large as what I had forecasted, based on the December Hogs and Pigs Report. The 2.163 million head was 0.7 per cent lower than last year and equal to the prior week. Slaughter for the eight weeks ending last Friday numbered 17.213 million head, 4.5 per cent lower than last year and 2.7 per cent lower than the level suggested by the December report. Note in Figure 2, though, that actual slaughter has been inching closer and closer to both expected and year-ago levels for the past few weeks.

Some of the pigs that have not shown up at market may still be on farms, but it appears that the December inventory numbers were high – at least for market inventories. The question now is whether it was just high in the categories for pigs weighing 60-lb. and more, or if the error extends to lighter categories and farrowing intentions. All eyes will now turn to the March Hogs & Pigs Report set to be released on 26 March. The survey for that report hits the field this week.

Canadian Hog Count Snafu

It doesn’t help much to check your work when you make the same mistake – twice! Such was the case with my statement last week regarding hog number declines in Ontario and Quebec. In fact, it was Ontario – as expected – that saw the largest year-on-year total inventory decline (7.6 per cent) among Canada’s major pork-producing provinces. Quebec’s herd fell by only 2.6 per cent. As with the all-Canada numbers, though, the sow herd reductions (-3.3 per cent in Ontario, -0.9 per cent in Quebec) were much smaller than the total inventory reductions in both provinces.

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