More Pork Being Pushed into Cold Storage

US - Hog prices ended the week nearly $4 higher than the week before, writes Ron Plain.
calendar icon 6 December 2010
clock icon 4 minute read

The national weighted average carcass price for negotiated hogs Friday morning was $65.19/cwt, up $3.82/cwt from the previous Friday. The top live hog price Friday at Sioux Falls was $48.50/cwt. The top at Zumbrota was $46 and Peoria’s top was $46.50/cwt. The interior Missouri live top Friday was $47.50/cwt, up $3.75 from last Friday.

The number of non-contract hog sales has been steadily declining. Negotiated sales dropped below 15 per cent of barrows and gilts in 2002 and below 10 per cent in 2006. For July thru October less than 5 per cent of market hog slaughter was negotiated. Today, there were no negotiated purchases on a carcass weight basis in the Western Corn Belt on USDA’s morning price report. The average carcass price this morning in the eastern corn belt was $65.21/cwt.

Increased daily hog slaughter and record weights this fall are pushing more pork into cold storage. At the end of October, stocks of frozen pork were down 7.4 per cent from the year before, but up 12.7 per cent from the month before, and up 23.1 per cent from the end of August. The frozen pork stocks were the lowest for any October since 2005. Beef and turkey stocks in cold storage were both down from 12 months earlier, but frozen broiler stocks were up 15 per cent.

The US economy added fewer jobs than expected during November and the unemployment rate climbed to 9.8 per cent, the highest in seven months. This is not good news for meat demand. Retail meat prices have been fairly high in recent months, not because of strong demand, but because of small supplies. Per capita meat consumption in 2010 is expected to be the lowest since 1997. Per capita meat supplies are expected to drop another 1.7 pounds in 2011. This will help hold up meat prices at the expense of a smaller livestock industry. USDA is forecasting 2011 per capita pork consumption at 46.7 pounds of retail weight, the lowest since 1978.

The average carcass weight of barrows and gilts slaughtered the week ending November 20 was 205 pounds, tying the record weight of the previous three weeks, and 5 pounds heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 275 pounds, the same as the week before and up 5.5 pounds compared to a year earlier.

USDA’s Thursday afternoon calculated pork cutout value was $77.89/cwt, down $1.53 from the previous Thursday. Hams were slightly higher this week while loins, butts, bellies were lower.

Hog slaughter totaled 2.319 million head this week, up 12.4 per cent from Thanksgiving week and up 1.8 per cent compared to the same week last year. Pork production is down 3.3 per cent for the year, but it has been above year-ago for each of the last seven weeks.

The December lean hog futures contract ended the week at $69.27/cwt, down $1.08 from the previous Friday. The February contract ended the week at $76.57/cwt and April settled at $80.27.

December corn futures ended the week at $5.59/bushel, up 21 cents from the previous Friday.

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