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Re-opening of Chinese Market to US Good News

by 5m Editor
22 May 2010, at 9:06am

US - The average price of pork in grocery stores during April was $2.919 per pound, write Ron Plain and Glenn Grimes.

That was up 0.5 cents from March and also half a penny higher than April 2009. Adjusted for inflation, retail pork prices were down 2 per cent from April 2009. Domestic per capita pork usage in April was down 5 per cent compared to a year earlier. Less consumption despite a lower deflated price means retail pork demand was down in April, 7 per cent lower by our calculations.

The average live price of 51-52 per cent lean hogs sold in April was $57.43/cwt, up $5.00 from March and $14.60 higher than April 2009. The wholesale to retail price spread was squeezed hard in April by a 30 per cent higher wholesale pork value with only a 0.2 per cent higher retail price. Pork packer margins were a bit wider this April than last.

Each year since USDA started the mandatory price reporting series in 2001, the western corn belt has had a higher annual average hog price than the eastern corn belt. The spread was widest in 2009 when the WBC carcass price averaged $2.53/cwt higher than the ECB. The relationship appears to have changed with the April closing of the Morrell plant in Sioux City. The average ECB hog price since that plant closed is within a dime of the WCB average price. Yesterday, the ECB average was 48 cents above the WCB average. Slaughter capacity matters.

China official reopened its market to US pork on 14 May. This is not likely to have a big short-term impact, but is very good news for the long run.

This week's hog slaughter totaled 2.016 million head, up 3.5 per cent from the week before, but down 2.4 per cent compared to the same week last year.

The average carcass weight of barrows and gilts slaughtered the week ending 8 May was 201 pounds, 1 pound lighter than the week before but 1 pound heavier than a year ago. Iowa-Minnesota live weights last week averaged 270.3 pounds, up 1.1 pounds compared to a year earlier.

The turmoil in the financial markets spilled over into commodities this week and not in a positive way. The June lean hog futures contract ended the week at $81.54/cwt, down $2.01 from the previous Friday. The July contract settled at $82.27, down $1.55 for the week. August closed the week $1.18 lower at $82.32/cwt and October ended the week at $74.55/cwt.

USDA's Thursday afternoon calculated pork cutout value was $87.76/cwt, down $3.05 from the previous Thursday, but still up $27.88 compared to the same day last year.

The national weighted average carcass price for negotiated hogs Friday morning was $81.50/cwt, $1.90 lower than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $80.82, western corn belt $82.55, and Iowa-Minnesota $83.00/cwt. The top live hog price Friday at Sioux Falls was $58.50/cwt, down $2.50 from the previous Friday. Peoria topped at $54.50 on Friday and Zumbrota, MN had a top price of $57. The interior Missouri live top Friday was $58.75/cwt, $1.50 lower than the previous Friday.