Pork Production Up, Exports Down, Supplies Tight

US - Pork production is down, exports are up and pork supplies are tight, writes Ron Plain.
calendar icon 28 August 2010
clock icon 4 minute read

There were only 391 million pounds of pork in US cold storage on 31 July . That was 27.5 per cent less than a year earlier and the lowest of any month since October 2001.

Statistics Canada reports that the Canadian sow herd was down 4.8 per cent on 1 July. This is the 21st consecutive quarter below year-ago. Canadian sow numbers are down 19.1 per cent compared to 5 years ago. Litters farrowed during the second quarter were down 4.3 per cent. Stats Canada is predicting that third quarter farrowings will be down 5.7 per cent and fourth quarter down 5.5 per cent.

The US Commerce Department has revised downward their estimate of economic growth. They now say the US economy grew at an annual rate of only 1.6 per cent during the second quarter of 2010 rather than their earlier 2.4 per cent estimate. That is the second straight quarter of slowing growth and implies growth could turn negative later this year. Slow economic growth is not good for meat demand.

The number of hogs sold on the spot market continues to decline. During the first half of 2010 only 7 per cent of barrow and gilt sales to large packers were negotiated sales. It is up to producers to decide if they want the spot market to survive. If producers want spot market pricing in the future, they have to commit to selling a portion of their hogs that way.

The pork cutout value set a new record this week, peaking at $96.74/cwt on Tuesday, up $2.33 from the old record set in August 2008. Since Tuesday, the cutout has been dropping. Thursday afternoon's calculated pork cutout value was $93.73/cwt, down 63 cents from the previous Thursday. Loin and butt prices are lower this week while hams and bellies are higher.

The national weighted average carcass price for negotiated hogs Friday morning was $79.36/cwt, $1.28 lower than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $79.30, western corn belt $79.49, and Iowa-Minnesota $79.26/cwt. The top live hog price Friday was $56/cwt at Sioux Falls and $55 at Peoria. The interior Missouri live top Friday was $56.50/cwt, 75 cents higher than the previous Friday.

This week's hog slaughter totaled 2.11 million head, up 1.8 per cent from the week before, but down 4.2 per cent compared to slaughter during the same week last year. Since 1 June, barrow and gilt slaughter has been about 2 per cent lower than implied by USDA's June Hogs and Pigs report.

The average carcass weight of barrows and gilts slaughtered the week ending 14 August was 197 pounds, the same as the week before and the same as a year earlier. Iowa-Minnesota live weight last week averaged 266.6 pounds, up 1 pound compared to a week earlier, but 0.6 pounds lighter than the same week last year.

The October lean hog futures contract ended the week at $74.82/cwt, down $2.38 from the previous Friday. The December contract settled at $72.57 for the week. February closed the week at $75.07/cwt.

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