Reduced Production and Inventories Improve Prices

CANADA - The Saskatchewan Ministry of Agriculture credits a 15 per cent increase in live hog prices over the past month to reduced North American pork production and lower volumes of meat in cold storage, writes Bruce Cochrane.
calendar icon 9 March 2010
clock icon 3 minute read

US weekly hog slaughter numbers over the six weeks that ended 6 March are down about two and a half per cent from one year ago while Canada slaughter numbers over the five weeks that ended February 27th have been 1.7 per cent higher than one year earlier.

Brad Marceniuk, a Livestock Economist with the Saskatchewan Ministry of Agriculture, says overall North American hog production has declined which has been positive for inventory levels and prices and we saw increased US exports toward the end of 2009.

Brad Marceniuk-Saskatchewan Ministry of Agriculture

North American hog prices have been trending upward over the last few weeks.

Current SPI index 100 hogs for Monday, March 8 actually are ranging in the 131 to 141 dollars per 100 kilograms.

In the US the Iowa Minnesota price averaged 72.23 US per 100 weight on Friday and that's an improvement of about 15 per cent since early February.

Looking at the key factors, we've seen lower cold storage numbers and lower meat production.

Cold storage numbers of pork at the end of January were down about 18 per cent from a year ago.

Pork stocks have actually been below about 500 million pounds over the last three months, their lowest levels that we've seen over the last two years.

Likewise total meat in US cold storage at the end of January was well below year ago levels at about 1.856 billion pounds and that's well below levels that we've seen in the last two years also so a combination of lower pork in cold storage but overall lower meat in cold storage has been really positive for prices.

Mr Marceniuk says factors to watch will be US hog slaughter numbers, pork export demand and the value of the Canadian dollar.

He says further reductions in hog slaughter numbers will help improve hog prices but a noticeable improvement in North American pork exports is needed to see a large jump.

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