US hog prices strong on demand

Wholesale pork prices on the CME have been very strong for much of April leading packers to pay ever higher prices for hogs, according to reports.

Current lean hog carcass prices are the highest since August 11, 2008.

Analysts cite strong demand for many pork cuts driving average cutout value for April to US$83.76 per hundredweight, 43% higher than April 2009 (based on a simple average of daily closing prices).

The pork loin primal value also has rebounded and at US$96.60 per hundredweight it was 32.1% higher than in April 2009. All other primals showed significant gains over a year ago. Pork belly prices have also moved sharply higher, contributing US$4.60 to the US$25 overall increase in the value of the pork cutout.

Analysts noted that July and August hog futures are hovering above US$87 per hundredweight, implying cutout values over the US$90 mark. “For that to happen, we will need continued strong gains not just in the ham market, which is currently driven by robust export sales, but also in the market for pork loins,” they said.

Adding support for pork prices is robust export demand. According to US Meat Export Federation economist Erin Daley, “we've seen a lot of strength coming from those export items, particularly hams.”

Daley added that prices are about double what they were a year ago so the ham cut out is nearly 80 cents per pound. Also picnics, at 68 cents per pound, are up 78% from last year.

He said Mexico is by far the largest market for hams, noting exports to that country through February were up 22%. Japan remains the largest value market where loins are a big item.