July 26, 2010

US hog prices escalate in June

 

US retail pork prices in June set a record for the second month in a row; the average price of pork in grocery stores in June was US$3.104 per pound, according to Ron Plain, University of Missouri agricultural economist.

That was 6.1 cents higher than in May and 15 cents higher than in June 2009. The June distribution-retail margin on a pound of retail pork was up 11.2 cents from May, but down 19.5 cents from a year earlier.

According to Plain, the packer margin in June was up 3.3 cents per retail pound compared to the month before and up 6 cents from June 2009, noting that the net farm value of a pound of pork at retail during June was down 8.5 cents from May, but up 28.5 cents from 12 months earlier.

Low wholesale pork prices last summer caused unusually high retail margins and low net farm value. Wholesale pork was cheap then because of weak export demand caused by the non-swine flu scare.

Export demand for US pork in May 2010 was up 53% from the flu-depressed level of May 2009. Plain explained that based on preliminary data, it looks like retail demand for pork in June was above year-ago for the first time in 9 months. June live hog demand was above year-ago for the fifth consecutive month, he said.

Meanwhile, hog prices with a few hogs were sold above US$80 per hundredweight (carcass price) on Thursday (July 22). The national weighted average carcass price for negotiated hogs Friday (July 23) morning was US$77.64 per hundredweight, US$4.63 higher than the previous Friday.

USDA's Thursday afternoon calculated pork cutout value was US$85.51 per hundredweight, up $4.24 from the previous Thursday.

This week's hog slaughter totaled 1.961 million heads, down 2.0% from the week before and down 3.4% compared to slaughter during the same week last year. Year-to-date, pork production is down 3.9%.

The average carcass weight of barrows and gilts slaughtered the week ending July 10 was 199 pounds, up 1 pound from the week before and up 2 pounds compared to a year ago. Iowa-Minnesota live weights last week averaged 267.3 pounds, up 1.1 pounds compared to a year earlier.

The August lean hog futures contract ended the week at US$83.22 per hundredweight, up US$1.52 from the previous Friday. The October contract settled at US$77.02 up US$1.32 for the week. December closed the week 90 cents higher at US$74.35 per hundredweight and February ended the week at US$75.80 per hundredweight.

The September corn contracted ended the week at US$3.71, down 24 cents from the previous Friday. September soybean meal futures lost US$7.80 this week to settle at US$290.40 per tonne.