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CME: Saturday Hog and Cattle Slaughter

by 5m Editor
30 November 2010, at 12:06am

US - Last week’s holiday-shortened slaughter runs for cattle and hogs saw a continuation of recent patterns with cattle slaughter exceeding year-ago levels by 8.4 per cent and hog slaughter 1 per cent higher than during the same week last year, write Steve Meyer and Len Steiner.

FI cattle slaughter numbered 582,000 head, sharply lower, of course, than the week before but significantly larger than last year. US hog plants processed 2.064 million head, 11.3 per cent fewer than last week. Dressed weights for slaughter hogs were equal to last week, continuing a recent pattern that indicates that the pork industry may finally be at least keeping up with performance levels in getting hogs moved to slaughter. Slaughter weights normally peak about now so we expect them to begin to decline during December — but not by much. The factors that caused performance to improve sharply this fall — good quality, palatable corn and cool temperature — are still in place. And as a producer remarked to us last week “It is still easier to heat a barn than it is to cool a barn.” That means that producers can keep temperatures at optimal levels barring any extremely severe weather or snowfall and thus keep these hogs growing at a rapid pace. Any “pulling forward” of marketings this fall is likely to continue.

That may or may not be the case for cattle, of course, since the vast majority of them are fed in open lots. Cold temperatures impact feed intake and conversion rates but it is usually snowfall and wind that cause the biggest problems for feedlot operators. We have seen little unusually severe weather yet but rare is the winter that does not deal a few weather episodes to major feedyard areas.

Saturday slaughter operations are the “shock absorber” for US livestock slaughter firms. Plants cannot shift easily (or at all) from single to double-shift operations to handle extra animal numbers. Plants usually do no have enough slack in either coolers or freezers to handle the extra product and additional labor is not available on a short-run basis. Daily operations can be extended to 9 or 10 hours per shift but the best way to handle high supplies is to operate on Saturdays.

Nowhere is that more apparent than in the hog slaughter sector at Thanksgiving. The combination of a weekday holiday and seasonally high hog supplies almost always results in the largest Saturday slaughter run of the year. And the fact that the Saturday total is almost always well short of a normal weekday total sets up the week after Thanksgiving (usually the first week in December) as the typical highest weekly hog kill of the year.

The charts below show Saturday slaughter for the past two years and the average for 2004-2008. Last week’s Saturday total is the HIGHEST EVER for the US pork industry. In fact, last Saturday’s slaughter even exceeded that of 1998 in both absolute number (366,000 to 308,000) and capacity utilization rate (84 per cent to 77 per cent). Those large Saturday runs were quite persistent in 1998 and early 1999 but the winner to-date on persistent high winter supplies was 2007-2008 when high numbers of pigs came to market as the result of the widespread availability of porcine circovirus vaccines the previous summer. Saturday slaughter exceeded 200,000 head in 18 of 21 weeks between Labor Day 2007 and the end of January 2008. Five weeks saw more than 300,000 head on Saturday, including weeks that now rank 2nd and 3rd on the all-time list.



Saturday slaughter is important in the cattle industry as well — but at a MUCH different time of year. The reason, of course, is the sharply different seasonal pattern for cattle slaughter owing to far more seasonality in calving and in the placement of cattle in feedlots. The cattle slaughter peak almost always occurs the week following the US Memorial Day holiday with less pronounced peaks after Independence and Labor Day holidays.