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.