August 31, 2009

The ham portion has been primarily responsible for boosting the pork carcass value by 10 percent over the past two weeks, but the latest carcass composite quote was still nearly 30-percent below a year ago.

 

On August 14, the USDA's primal cutout value for ham was a lowly US$39.28 per hundredweight and at just 43 percent of the year-ago value. Ham prices at this time a year ago were a record high. The mid-month ham quote was also only 54 percent of the average for that date during the previous five years.

 

A combination of bearish factors weighed on ham prices throughout most of the summer, including larger-than-expected hog supplies, slowed export sales and uncertainty about demand for pork worldwide since the discovery of the novel AH1N1 flu in late April.

 

On Friday (Aug 28) afternoon, the USDA's primal cutout value for ham was quoted at US$62.65, an increase of US$23.37, or 59 percent, from August 14. Hams make up approximately 25 percent of the pork carcass by weight, so they have accounted for all of the gain in the overall cutout value since mid-month.

 

Analysts and meat brokers said the majority of the buying interest for hams that led to the price rebound was in the international markets, mainly Russia. Some speculate that with the low levels from which ham prices started, after the market began to move up, some domestic and international buyers who had been waiting on the sidelines may have stepped in to buy as well, adding further to the strength.

 

Some analysts predict that the rally in ham prices has been too steep to be sustained and that the market may soon stall before giving back some of the recent gains.

 

Wholesale beef prices Friday were up slightly from a week ago but both the choice and select beef quotes were 92.2 percent of their respective year-ago quotes.

 

This week's cattle slaughter was estimated at 654,000 head, compared with 653,000 a week ago and 677,000 a year ago. Year-to-date cattle slaughter is down 5.1 percent from a year ago.

 

The week's hog slaughter estimate was 2.196 million head, compared with 2.228 million a week ago and 2.227 million a year ago. For the year, hog slaughter is off 3.5 percent.

 

The USDA estimated total beef, pork and lamb production for the week at 959.5 million pounds. Last week's output was 963.6 million pounds, and the year-ago figure was 970.4 million pounds. Year-to-date output is down 3.3 percent.

 

Broiler/fryer slaughter for the week was estimated at 165.535 million head, compared with 163.995 million a week ago and 168.672 million a year ago.