Highlights

Year-to-date hog slaughter up 9.6 percent    Year-to-date meat output up 4.8 percent

March 31, 2008

 

US Q1 pork production up 10 percent on-year

 

 

US pork production for the first quarter is on track to exceed the year-ago figure by 10 percent, according to preliminary data from the USDA, easily setting a record for the period.

 

Hog supplies have continued to exceed expectations. Market analysts said USDA's  more detailed quarterly hogs and pigs report will likely include upward revisions to the two previous surveys released in September and December to bring those supply figures up nearer to the levels indicated by first-quarter slaughter rates.

 

Exports remain a positive factor for the hog markets and are helping underpin prices. Bob Brown, private analyst in Edmond, Okla., said 51 percent to 52 percent lean hog prices for the quarter through Thursday have averaged US$53.77 per hundredweight. This compares with an average of US$55.37 for same period in the the previous 10 years.

 

While prices are down from a year ago and the 10-year average, given the huge increase in supplies, the situation could have been much worse for producers if export sales and domestic demand were not strong.

 

Sow and gilt slaughter data compiled by Glenn Grimes and Ron Plain, agricultural economists at the University of Missouri, indicate that liquidation of the breeding herd is finally underway. Producers have been losing money for about six months, and the latest actual slaughter data show an increase in the number of female hogs being shipped to packers.

 

The slaughter figures "show we are reducing the breeding herd," Grimes told Dow Jones Newswires. His data for the week ended March 15 showed gilt slaughter up 8.3 percent from a year ago, compared with a year-to-date rate of up 2.0 percent.

 

Market analysts and economists estimate that producers have lost from US$30 to US$40 per head on the hogs they have sold in the past three months, with some having started to lose that much since October 2007.

 

However, others with price protection measures in place are less likely to suffer much. Still, feed costs have risen further during the first quarter, dampening the outlook for producer returns this summer.

 

Cash hog prices rallied a bit this week, which for some indicates the front end of the spring rally. Predictions for prices early next week are steady to firm.

 

Cattle/Hog Slaughters 
 

The USDA estimated this week's cattle slaughter at 619,000 head, compared with 648,000 a week ago and 611,000 a year ago. Year-to-date cattle slaughter is down 0.3 percent.

 

The week's hog slaughter was estimated at 2.258 million head, down from last week's figure of 2.306 million but up 8.0 percent from the year-ago number of 2.909 million. Year-to-date hog slaughter is up 9.6 percent.

 

Total Meat Production 
 

The USDA estimated total beef, pork and lamb production for the week at 943.0 million pounds. Last week's output was 975.5 million, and the year-ago figure was 893.4 million pounds. Year-to-date combined meat output is up 4.8 percent.

 

Broiler/fryer slaughter this week was estimated at 160.833 million head, compared with 160.412 million a week ago and 158.956 million a year ago.