August 20, 2007

 

US hog prices drop after China's delisting of US plants

 

 

Cash prices for slaughter-ready hogs this week declined sharply in the wake of a Chinese move to delist the eligibility of eight US pork plants to export to China.

 

Market analysts and economists also blamed steep declines in financial and stock markets for the weakness seen late in the week.

 

Bob Brown, private market analyst, said pork packers were restrained in their slaughter rates this week.

 

Packer margins last week were "horrible," Brown said. To help control product inventories and reduce costs for slaughter inventory, packers kept this week' slaughter rate steady.

 

Brown said pork cutout values went up again this week, putting packing plants into profitable territory again. It is possible that growing late-August pork demand caught up with the kill rate, and may result in steady to firmer hog prices next week, he said.

 

The problem with calling for higher hog prices next week is that the number of slaughter-ready hogs usually climbs in late August into September as well.

 

Cattle prices this week were roughly steady as the number of cattle being put up for sale declined, analysts and traders said.

 

Most expect prices next week remain steady, although some say struggling beef values could limit packer interest if cattle feeders get too bullish.

 

US cattle slaughter for the week was estimated at 667,000 head, down from 674,000 a week ago and 689,000 a year ago. Year-to-date slaughter stands at 21.342 million head, up 1.4 percent from a year earlier.

 

Hog slaughter this week was estimated at 1.989 million head, down from last week' 2.008 million and 1.5 percent smaller than the year-ago figure of 1.960 million. Year-to-date hog slaughter is 65.232 million head, up 2.4 percent from a year ago.

 

The USDA estimated total beef, pork and lamb production for the week at 919.3 million pounds. Last week' output was 928.2 million pounds and the year-ago output was 929.7 million pounds. Year-to-date combined meat output is 29.641 billion pounds, up 1.3 percent from last year.

 

Broiler slaughter for the week was at 165.4 million head, up from 163.7 million a week ago and 162.061 million a year ago.