November 23, 2010

US pork inventory declines as hog herd shrinks
 
 
Pork stockpiles in the US decreased by 7.4% at the end of October from last year after farmers decreased the quantity of their herds to support prices, the government said.

Warehouses had 478.2 million pounds of pork instead of 516.3 million pounds on October 31, 2009, the USDA said. Inventories increased by 13% from the end of September.

Pork production in the previous month may have increased by approximately 3% from last year, said an analyst. At the beginning of September, the figure of breeding hogs was about 5.77 million, reaching the smallest size on record.

"We have done quite a bit of liquidation on the production side up until the first half of this year," the analyst said. "That is one reason why we have this lower stock issue. We are past the point of the tightest stocks. We are now starting to build up stocks."

Supplies increased in contrast to last month as exports decreased and the slaughter rose, Nelson said. Export of pork declined by 7.8% in September from last year, according to the latest USDA data.

"The trade assumes that lower export pace may have been taken into October as well," the analyst said.

Hog futures for February settlement increased US$0.0015 cent to US$0.77 a pound on CME. The price recently reached US$0.78, a two-month high. The commodity declined by 12% in the previous month whereas wholesale pork decreased drastically by 17%, the greatest decline in a month since August 2002. Still, the most-active contract was up 17% this year before today.

As of October 31, stockpiles of pork bellies, which are processed and sliced to produce bacon, decreased by 37% from last year at 23.2 million pounds, according to yesterday's (Nov 22) report. Warehouse supplies of ham increased by 16% to 150.6 million pounds.

Chicken-meat inventories at the end of October were 15% bigger than last year at 733.5 million pounds, the USDA said. Beef supplies decreased by 6% to 402 million pounds.