August 17, 2009

 

US cash hogs, pork nearby hog futures down nearly 50 percent from yearago

US cash hog prices along with wholesale pork values and nearby lean hog futures are all down nearly 50 percent from their respective year-ago quotes.

 

Pork complex prices have been pummelled by larger-than-expected hog supplies this month and record high carcass weights for this time of the year combined with slowed export sales since April. Record highs hit about this time a year ago in hog and pork prices have made the year-on-year spreads wider as well.

 

The Chicago Mercantile Exchange August lean hog contract expired at 13:00 EDT Friday (August 14) at 49.12 cents a pound, just 55 percent of the August 2008 expiration and the second lowest in history for that month.

 

Rich Nelson, director of research at Allendale Inc. in McHenry, Illinois, said only the August 2002 lean hog contract had a lower settlement, which was at 48.25 cents.

 

The August hog contract fell 1,642 points, or 25 percent, since the mid-July cycle high to its expiration Friday. From the contract high of 96.00 cents hit on July 3, 2008, the expiration represented a 49 percent slide.

 

The US Department of Agriculture's pork carcass composite value, commonly known as the pork cutout, on Thursday hit a 6 1/2-year low at US$52.31 before a modest gain on Friday to end the week at US$52.52.

 

USDA's national weighted average hog price Friday was quoted at US$46.20. That was down US$39.08, or 46 percent, from a year ago.

 

The beef complex fared much better this week than pork did. Wholesale beef prices were up slightly in both the choice and select grades. Cash cattle prices were steady to US$1 per hundredweight higher.

 

At this week's sales prices of mostly US$82 on a live basis, cattle feeders are breaking even to losing around US$50 per head, said Don Close, analyst with Texas Cattle Feeders Association.

 

Last week's cattle slaughter was estimated at 643,000 head, compared with 627,000 a week ago and 687,000 a year ago. Year-to-date cattle slaughter is down 5.2 percent from a year ago.

 

The week's hog slaughter estimate was 2.240 million head, compared with 2.096 million a week ago and 2.144 million a year ago. For the year, hog slaughter is off 3.6 percent.

 

The USDA estimated total beef, pork and lamb production for the week at 955.5 million pounds. Previous week's output was 912.6 million pounds, and the year-ago figure was 959.8 million pounds. Year-to-date output is down 3.5 percent.

 

Broiler/fryer slaughter for the week was estimated at 163.928 million head, compared with 164.770 million a week ago and 167.289 million a year ago.