November 10, 2008
US hog producers disappointed with first November week trade
If hog producers were glad to see October fade into history, hog buyers said producers were deeply disappointed by the first week of November.
Prices for slaughter-ready hogs fell about $3 per hundredweight on a dressed basis and about US$2 on a live basis, and by the end of the week, buyers and traders were giving up on hopes for a rally in November.
December lean hog futures traded sideways for the week, but charts show a slightly bearish bias toward the end of the week.
Traders and brokers blamed the lack of any strength in the pork market for the declines in hog prices. The US Department of Agriculture's pork cutout value dropped US$5.37 per hundredweight, or 8.64 percent, in just the five business days from Friday, Oct. 31 through Thursday. Hams seemed especially vulnerable to declines.
Even though pork exports through the first eight months of this year already exceeded total exports of 2007, traders said export markets in October and into early November were behind the weakness in the total pork market. Some export business continues to be done, but volumes are small compared to mid-year, and the product continues to stack up in the coolers.
Meanwhile, wholesale beef markets caught on this week as retail grocers stepped in to cover their short-term holiday needs, market analysts and traders said. A choice cutout value that dropped to US$141.71 per hundredweight also made the product more attractive to the buyers since it offers them the chance to market it to consumers at an attractive price and still make a profit.
That demand for beef middle meats bled over into the end cuts and helped support chuck and round prices as the week progressed, market analysts said. Some said the demand tended to feed on itself since many retail buyers had been looking for signs the wholesale beef market had turned higher and wanted to step in and fill their needs as the market was rallying rather than take the chance that prices could decline after they made their purchases.
Last week's cattle slaughter was estimated at 621,000 head, down from 638,000 a week ago and 643,000 a year ago. Year-to-date cattle slaughter is up 0.3 percent from a year ago.
Last week's hog slaughter estimate was 2.307 million head, down from 2.386 million a week ago and 2.360 million a year ago. Year-to-date slaughter is up 7.3 percent.
The USDA estimated total beef, pork and lamb production for last week at 958.9 million pounds. Previous week's output was 988.1 million pounds, and the year-ago figure was 992.9 million pounds. Year-to-date combined meat output is up 3.5 percent.
Broiler/fryer slaughter last week was estimated at 162.059 million head, down from 163.319 million a week ago and 168.915 million a year ago.