Early April may be repeat for seasonal bottom in US pork prices

In 2008, wholesale pork prices hit a seasonal bottom on April 1 then rallied sharply through mid-May, and some analysts and commodity traders predict a similar action for the market this year.

 

The USDA reported sharply lower prices for the pork cutout Tuesday (Mar 31) and Wednesday (Apr 1) that put the mid-week quote at US$55.00 per hundredweight. That was a four-month low. On Thursday (Apr 2), the cutout advanced US$1.13, which led to speculation by some market observers that a seasonal bottom may have been established. On Friday (Apr 3), the USDA reported the pork cutout up again with a gain of US$0.81 to US$56.94.

 

Bullish views for the market include expectations of a further reduction in supplies of slaughter-ready hogs by mid-April combined with seasonal strength in pork prices and improved demand. Last year, pork carcass composite values surged nearly US$20 per hundredweight from the seasonal low on April 1 to the end of the month.

 

Five- and 10-year charts do show a definite stronger pattern for hog and pork prices from early April through the middle of May, and sometimes into June. Demand for grilling cuts such as loins, butts and spare-ribs normally heats up around this time of the year. Meanwhile, hog supplies tend to tighten, contributing to the price rally.

 

Other analysts, brokers and traders, however, aren't ready to call Wednesday's quote a seasonal bottom just yet. They said with another week left before the Easter holiday, buying interest from retailers for fresh pork cuts could be slow and possibly lead to another test of the US$55.00 quote.

 

The grocery chains are expected to feature fewer fresh pork cuts next week to make room for more hams, turkeys, some beef cuts and other meats that are traditional favourites among US households for the Easter holiday.

CATTLE/HOG SLAUGHTERS

 

This week's cattle slaughter was estimated at 606,000 head, compared with 581,000 a week ago and 626,000 a year ago.

 

The week's hog slaughter estimate was 2.164 million head, compared with 2.197 million a week ago and 2.283 million a year ago.

 

The USDA estimated total beef, pork and lamb production for the week at 927.4 million pounds. Last week's output was 914.3 million pounds, and the year-ago figure was 949.2 million pounds.

 

Broiler/fryer slaughter for the week was estimated at 154.753 million head, compared with 155.520 million a week ago and 166.456 million a year ago.