March 4, 2009

US cash hog prices forecasts in March are little changed from February and remain tempered by uncertainty about demand.

 

The ongoing economic crisis and ample supplies of animal proteins have left the wholesale pork market as well as the beef complex in a weakened state.

 

USDA's daily pork carcass composite values last week averaged US$56.31 per hundredweight, the lowest since the split week of late December and early January.

 

USDA's choice grade beef price quote on Friday (Feb 27) hit the lowest level since early August 2005.

 

Market analysts said the combination of low pork and beef prices reflects soft demand overall, which could be the factor that keeps hog prices from moving up much in March even if supplies tighten as expected.

 

Private analyst in Edmond, Oklahoma, Bob Brown said seasonal charts show a generally flat market for hog prices in March compared with February.

 

Last year, cash prices slid to a late-winter/early-spring low during the third week of March and then rebounded smartly in the final week of the month.

 

Brown sees little change on hog prices for the month from where they are now and predicted a US$56 per hundredweight price average on a 51 percent to 52 percent lean carcass basis for March, down slightly from an average of about US$58.50 in February.

 

The USDA's national weighted average price Monday (Mar 2) was US$55.22.

 

Kropf and Love Consulting in Overland Park, Kansas, analyst Joe Kropf is expecting fewer hog imports from Canada this year.

 

Kropf predicts that March weekly slaughters should be close to or slightly less than in February and prices are expected to be steady to slightly higher than last month.

 

Purdue University agricultural economist Chris Hurt projected hog prices on a live weight basis to average US$42.50 per hundredweight in the first quarter of 2009; a US$42.50 live price is about equal to $57 on a dressed or carcass basis.

 

In a market outlook report released Monday (Mar 2), Hurt foresees live-weight prices rising from the low US$40s currently to near US$50 by May.

 

He said hog prices will not see much enhancement this year due to reductions in demand, particularly export demand.

 

He also said that robust pace of pork export demand in 2008 is not going to be maintained as USDA anticipates a 14 percent drop.

 

He added that although 2009 domestic pork production will drop by 1 percent to 2 percent, smaller export sales mean that pork supplies available for US consumers will rise modestly for the year, but with some differences by quarter.