January 14, 2008

 

US pork output tops beef as it hits second largest slaughter ever 
 

 

Last week's (week beginning January 7, 2007) US hog slaughter was the second largest ever, and pork production topped beef output for the first time since 2004.

 

The USDA estimated hog slaughter for the week at 2.444 million head, up 16.4 percent from a year ago. The record weekly figure was set in mid-December at just under 2.470 million head.

 

Market analysts and livestock dealers said profitable processing margins and readily available supplies of hogs encouraged packers to push large numbers through plants.

 

Dow Jones Newswires' packer margin index averaged US$14.10 per head for Monday through Thursday, compared with US$10.35 the previous week and US$8.28 a year ago.

 

Meanwhile, negative operating margins in the beef sector caused some packers to trim hours, which limited the cattle slaughter to 631,000 head.

 

It is extremely rare for weekly pork production to top the beef output. This has happened only twice before since 1991 and both of those instances were in 2004 during holiday weeks, said Ron Plain, agricultural economist at the University of Missouri. In those weeks, processing margins for hogs were wide, and beef packers were operating at negative margins.

 

Livestock producers saw further increases in feed costs following the release of the USDA's annual crop production report early Friday. The data showed smaller-than-expected production and ending stocks for corn, which pushed corn futures up the 20-cent per bushel daily trading limit in most months. March corn ended 20 cents higher at US$4.95 and December closed 20 higher at US$5.13 1/4.

 

Market analysts and economists said high feed costs along with the current low hog prices could cause swine operations to soon begin reducing their breeding herds. However, reductions in barrow and gilt slaughter would not occur until at least December or into the first quarter of 2009.

 

Combined beef/veal, lamb and pork production this week was estimated at 994.5 million pounds, compared with 831.1 million pounds last week (up 19.6 percent) and 898.6 million (up 10.7 percent) a year ago.

 

Broiler/fryer slaughter for the week was estimated at 169.098 million head, compared with 136.027 million a week ago (up 24.2 percent) and 160.409 million a year ago (up 5.6 percent ).