September 1, 2008

 

US wholesale pork prices slide nearly 10 percent

  

 

US wholesale pork prices fell $8.60 per hundredweight last week and the weaker quote to end the week extended the number of consecutive lower days to ten.

 

On August 15, the US Department of Agriculture's pork carcass composite value hit an all-time high at US$94.41 amid record large export sales and stable domestic demand. Friday's (August 29) cutout value was quoted at US$80.26.

 

On Tuesday, the USDA's pork cutout value fell US$3.93. That was the second largest single-day drop to the December 8, 2004 slide of US$4.78 for the new pork cutout series, which was initiated in 1998, according to Glenn Grimes and Ron Plain, agricultural economists at the University of Missouri.

 

Grimes said new records were set for three- and four-day declines in the cutout this week.

 

Market analysts and meat brokers said fresh ham prices climbed to record highs in mid-August on strong export sales. The weak US dollar this summer, compared with other currencies, and reduced hog production in Europe and Canada contributed to the expanded international sales. Also, growing economies in some countries that are deficit animal proteins have led to increased demand for US meat and poultry.

 

The high prices, expectations of seasonally larger US hog supplies into the fall and winter seasons along with possible trade issues with Russia and Mexico have led to a sharp downturn in the wholesale pork and cash hog markets in the past two weeks. Analysts and brokers said news that Mexican officials do not plan any immediate retaliation against the US, despite a decision by USDA to shut down some of Mexico's meat exports to the US, would be welcome news to US pork industry participants.

 

The USDA's primal cutout value for the fresh ham cut has declined from a high of US$90.60 per hundredweight on August 15 to US$74.60 Friday. Since hams make up approximately 25 percent of the carcass by weight, the decline in the primal ham price accounts for about US$4 of the loss in the cutout value.

 

After falling US$14.15, or nearly 15 percent, in the last two weeks, the USDA's pork cutout value Friday was still US$11.79 above the same-day year-ago quote. However, the cost of producing the hogs is also much higher than a year ago so farmer margins are actually lower than at this time last year, according to industry analysts.

 

Last week's cattle slaughter was estimated at 667,000 head, compared with 673,000 a week ago and 705,000 a year ago. Year-to-date cattle slaughter is up 0.8 percent from a year ago.

 

The week's hog slaughter was estimated at 2.212 million head, compared with 2.231 million last week and 2.100 million a year ago. Year-to-date hog slaughter is up 8.9 percent.

 

The USDA estimated total beef, pork and lamb production for the week at 964.3 million pounds. Last week's output was 963.6 million pounds, and the year-ago figure was 972.3 million pounds. Year-to-date combined meat output is up 4.6 percent.

 

Broiler/fryer slaughter this week was estimated at 168.922 million head, compared with 167.350 million a week ago and 171.530 million a year ago.