CME: Retail Pork Sales Sluggish So Far This Year
US - Yesterday we pointed out the weakness in wholesale beef markets and the impact this is having on live cattle values. Pork wholesale prices are not faring much better, so far, write Steve Meyer and Len Steiner.While
hog values have rebounded from last fall’s crash, they have come
under increasing pressure as prices for most pork primals are
now well below year ago levels. The decline is not a result of
more pork coming to market. Weekly hog slaughter (based on a
rolling 7-day moving total) is currently running around 1 per cent above
year ago levels. And pork output has lagged the increase in
slaughter as hog weights continue to run below year ago levels,
offsetting the higher hog numbers. The latest USDA Mandatory
Reporting data indicates the average hog carcass weights are
currently at 207.6 lb/carcass, 0.6 per cent lower than a year ago.
Looking at the performance of individual primals, a couple
of items stand out. The loin primal continues to struggle. On
Wednesday, USDA pegged the loin primal value at $87.58/cwt,
$12.34/cwt (12 per cent) below year ago levels. The decline in the value
of the loin primal accounted for almost 40 per cent of the overall decline
in the pork cutout. Retail meat sales have been sluggish so far
this year, as high retail meat prices force consumers to look at
less expensive alternatives or reduce the supply of meat they take
home. As with big beef roasts, retailers are having trouble moving
items such as pork butts. Food service demand for top butts
also has been disappointing. The top butt primal on Wednesday
closed at $77.65/cwt, down $19.3/cwt (20 per cent) from a year ago. The
decline in the value of pork butts (shoulder) accounted for a quarter
of the decline in the value of the cutout. Ham prices also remain
weaker than a year ago . Hams should be performing better
given that Easter this year is earlier than in 2012. The earlier
Easter tends to pull forward some of the seasonal purchases but
so far that does not seem to be the case. The ham primal was
last quoted at $61.12/cwt, down $7.1/cwt (10 per cent) from a year ago.
The only item that is outperforming year ago levels are pork bellies,
which are up 3 per cent from last year. Even bellies have lost
ground recently, however, with prices down some 20 cents a
pound (12 per cent) compared to a week ago.
Bottom line: Despite the weakness, one could argue that pork is
in a better place than beef at this point. Pork at retail is priced
quite competitively compared to other proteins. Some items, especially
ribs and loins, will likely provide retailers with excellent
feature opportunities this combing spring and summer. Export
demand, as always, remains critical since it accounts for about 1
in 4 pounds of pork produced. Press reports have offered ample
coverage in recent days to the spat between US and Japan regarding
currency valuation. This is not a theoretical conversation
or financial mumbo jumbo on CNBC. It is critical to the pork
business, as it directly affects the sticker price for US pork in
world markets. It bears watching closely.


Please note that USDA offices will be closed on Monday, 18 February in observance of the President's Day holiday. No daily price reports will be issued. Second, please note a typo in our letter from yesterday. We transposed the closing price for the choice cutout, rather than $188, which was the index value for 14 February 2012, it should have read $183.45, the closing value on 12 January 2013.