March 16, 2009

US wholesale pork prices this week climbed US$4.29 per hundredweight, or 7.8 percent, and on Thursday (March 12) passed the year-ago quote for the first time since late January.

 

Last week, the US Department of Agriculture's daily pork carcass value quotes averaged 6.1 percent below year-earlier levels, but the market surged this week, climbing to 3.4 percent above year-ago levels on Friday. Just Monday, prices were 6.5 percent below a year earlier.

 

The biggest gains on a cents-per-pound basis occurred in fresh hams and bellies. The USDA's primal value for loins also posted a solid advance.

 

In February and early March, processing margins were deeply in the red, according to Dow Jones Newswires' daily pork packer margin indexes. Hog prices were moving up while pork values continued to languish nearly 7 percent below a year ago.

 

Some market analysts and meat brokers had been predicting that a seasonal tightening of market-ready hog supplies could result in an upturn in pork prices by mid-March as weekly slaughter rates were expected to slip a few percentage points behind a year ago.

 

Last week's slaughter was down about 5.3 percent from the same period last year. If slaughter rates the next two weeks hold even with this week's estimated figure, the weekly average for March would be about 4.2 percent below last March.

 

In its December quarterly hogs and pigs report, the USDA showed hogs for marketing weighing 60 to 119 pounds as of Dec. 1, 2008, at 99 percent and the lightest group, or 60 pounds and under, at 94 percent.

 

Analysts and traders said the slaughter figures so far in March appear to be roughly on target with what had been expected, based on the quarterly data.

 

Wholesale beef prices have shown indications of a possible rally as well, but they remain well below the year-ago quotes. The choice beef cutout value ended the week at US$135.84, a modest gain of 78 cents on the week but still 6.7 percent below a year ago. Select was 70 cents higher for the week but off 6.0 percent from last year.

 

The economic crisis has slowed domestic sales of some meat products, particularly the more expensive cuts, and a stronger US dollar against most other currencies has contributed to a slowing of export sales compared with this time last year, analysts said.

 

Last week's cattle slaughter was estimated at 623,000 head, compared with 603,000 a week ago and 638,000 a year ago.

 

The week's hog slaughter estimate was 2.156 million head, down from with 2.223 million a week ago and 2.276 million a year ago.

 

The USDA estimated total beef, pork and lamb production for the week at 937.1 million pounds. Last week's output was 934.3 million pounds, and the year-ago figure was 963.3 million pounds.

 

Broiler/fryer slaughter for the week was estimated at 153.967 million head, compared with 153.409 million a week ago and 166.377 million a year ago.