US cash hog market rally may stall

 

 

Cash hog prices this week on average reached the highest point since August 2008 but slipped during the latter part of the week, leading to speculation that the long rally may have stalled.

 

The USDA's national weighted average hog price Wednesday (May 5) was reported at US$86.20 per hundred pounds, a 20-month top that flirted with the record high of US$87.41 on August 8, 2008. The rebound came about from reduced supplies.

 

Producers in the US and Canada trimmed their herds the last two years following heavy and extended financial losses from autumn 2007 through early this year.

 

Cash hog prices slipped Thursday and Friday, however, after packers further reduced their plant operating schedules. As long as packers were able to buy enough hogs and sell the pork at higher prices in tandem with the rising hog market, they had positive margins and kept weekly slaughters above two million heads, analysts and livestock dealers said.

 

Daily slaughters this week were below 400,000 with the exception of Tuesday, which was estimated at 402,000. In April, non-holiday slaughters averaged about 405,000 head.

 

Hog prices in April climbed US$15.55, or 23%. The wholesale pork markets raced up along with hogs throughout most of April but hit a stumbling block late in the month when the USDA's carcass price went above $90 and hit a 20-month high at US$90.71 on April 26.

 

Since April 23, the daily cutout values have declined in seven of the last 11 days. Friday's cutout figure was down US$0.51 from a week ago but 52.7% above a year ago.

 

Market analysts and livestock dealers said further trimming of the hog slaughter could help underpin wholesale pork prices for the near term. Beef and chicken prices are up from a year ago as well, so grocers have little from the other categories to use when negotiating with pork suppliers about prices, they said.

 

Meanwhile, last week's cattle slaughter was estimated at 673,000 heads, compared with 660,000 a week ago and 655,000 year ago. Year-to-date cattle slaughter is up 1.4% from a year ago.

 

Hog slaughter estimate was 1.992 million heads, compared with 2.028 million a week ago and 2.016 million a year ago. For the year, hog slaughter is off 4.2%.

 

The USDA estimated total beef, pork and lamb production for the week at 919.8 million pounds. Last week's output was 918.7 million pounds, and the year-ago figure was 916.8 million pounds. Year-to-date combined meat output is down 2.6%.

 

Broiler/fryer slaughter for the week was estimated at 166.452 million heads, compared with 163.557 million a week ago and 159.004 million a year ago.