October 12, 2009

US wholesale pork prices may run counter to the normal weaker trend at this time of the year and stabilize soon since the cutout in early October is already below the 2008 fourth-quarter low.

 

Some analysts predict that the year's low in wholesale pork prices may have been set in mid August when the cutout value slid to US$51.33 per hundredweight, its lowest since early January 2003.

 

Kevin Bost, president of Procurement Strategies Inc. in Chicago, in his latest market outlook report, said "the table seems to be set for some sort of a [pork market] rally - not only from the demand side, but also from the supply side." Bost said "retail pork features will be prominent and aggressively priced throughout October, with most of the benefit accruing to fresh pork cuts and bacon." October is National Pork Month, so there will some additional funding for the promotions as well, he said.

 

Some analysts and livestock dealers foresee weekly hog slaughters in October and early November to average from 1.0 percent to 1.5 percent below a year ago. They based their projections on reduced sow farrowings and a smaller pig crop in the spring and early summer as reported by the US Department of Agriculture in its quarterly hogs and pigs estimates.

 

This week's hog slaughter was down nearly 3.2 percent from a year ago. USDA's estimate for pork production this week was down 2.6 percent from a year ago. The difference in the percentage changes between slaughter and pork output was due to heavier hog weights this year.

 

For the week, wholesale pork prices fell US$0.85, or 1.6 percent.

 

Glenn Grimes and Ron Plain, agricultural economists at the University of Missouri, calculate demand for livestock and meat on a monthly basis. The latest figures for the first eight months of this year show pork demand at the consumer level was up 3.9 percent from a year ago for the period, while demand for beef was off 2 percent. Demand for live hogs, meanwhile, for the eight months was down 4.7 percent and for live fed cattle was down 8.5 percent, compared with a year earlier.

 

In the cattle complex, cash prices this week in the major feeding states were US$1.00 to US$1.50 lower on a live basis from US$82.50 to US$83. Dressed prices in Nebraska were US$2 to US$3 lower from last week.

 

Wholesale beef prices for the week were down slightly. Choice beef was off US$0.68 and select slipped US$0.57.

 

"With the weak consumer demand, especially at the restaurant and hotel trade level and the weak fed cattle demand, the seasonally rally in prices this fall, if any, is likely to be less than normal," Grimes and Plain said in their weekly cattle outlook report released Friday.

 

This week's cattle slaughter was estimated at 634,000 head, compared with 635,000 a week ago and 652,000 a year ago. Year-to-date cattle slaughter is down 4.6 percent from a year ago.

 

The week's hog slaughter estimate was 2.299 million head, compared with 2.329 million a week ago and 2.374 million a year ago. For the year, hog slaughter is off 3.1 percent.

 

The USDA estimated total beef, pork and lamb production for the week at 976.0 million pounds. Last week's output was 979.7 million pounds, and the year-ago figure was 998.0 million pounds. Year-to-date combined meat output is down 2.8 percent.

 

Broiler/fryer slaughter for the week was estimated at 161.533 million head, compared with 161.008 million a week ago and 163.786 million a year ago.