US cash hog, wholesale pork prices post stout February gains

US cash hog prices in February have climbed the most for that month since 2001, while wholesale pork gains were the largest since 2006, adding to the bullish sentiments in the market outlook for spring and summer.

 

The advance in hog prices for the latest month was nearly US$5 per hundred pounds on a live-weight basis, the second largest for February in the past 10 years. The 10-year average change from the end of January to the final business day of February was plus US$0.47.

 

For wholesale pork prices, the 10-year average change for February was plus US$2.13. This month's increase was US$4.23.

 

Each of the three strong February rallies in cash hog prices from 2000 through 2009 occurred when the market continued to advance into summer. Smaller supplies of slaughter-ready animals contributed to the gains along with a rising trend in export sales.

 

Market analysts and agricultural economists predict that the stronger trend for hog and pork prices will likely continue in March, but some said the gains may not be as brisk as those in February. They said grocers and other buyers at the wholesale level may show some resistance in paying even higher prices just yet since the spring rally usually does not get under way until April and sometimes May.

 

Weekly hog slaughter totals during February have averaged 2.156 million head, down 2.4% from a year ago. Weekly slaughters during March last year averaged 2.182 million head.

 

Kevin Bost, president of Procurement Strategies Inc. in Chicago, in his latest weekly market update said, "It is extremely unlikely that weekly hog slaughter will be any higher than 2.140 million in the month ahead. There will be no downside pressure on pork prices from the supply side."

 

Private analyst Bob Brown expects slaughter in March to be about 1% below a year ago, which would put the weekly average at about the same as in February.

 

Lean hog futures prices have rebounded sharply in February from end-January. April hogs stumbled on the first day of the month as that contract hit a 2 1/2-month low, but that set up the beginning of the rally that extended through the end of the month. April hogs Friday (Feb 26) closed at 72.80 cents a pound, representing a gain of 7.15 cents from the February 1 cycle low and 4.2 cents, or 6.1%, from the last day of trading in January.

 

The USDA estimated total beef, pork and lamb production for the week at 930.9 million pounds. Year-to-date combined meat output is down 4.3%.

 

Broiler/fryer slaughter for the week was estimated at 158.229 million head, compared with 155.055 million a year ago.