March 24, 2008

 

US hog slaughter sets new record for March

 

 

This week's US hog slaughter set a new record for March, and the month-to-date total is on pace to possibly hit a new high, despite March having one less weekday than a year ago.

 

The USDA estimated this week's hog slaughter at 2.306 million head, which was up 205,000 head, or 9.8 percent, from the year-ago figure.

 

The latest three weeks have set consecutive new highs for March hog slaughters, replacing the former record of 2.134 million set in the week-ended March 16, 2007.

 

These three weeks have averaged nearly 135,000 head, or 6.3 percent, above the previous record set last year.

 

Glenn Grimes, agricultural economist at the University of Missouri, said with the month-to-date figure already approximately 400,000 head above the same period a year ago, the March total may exceed the year-ago monthly tally for a new record. The race will come down to what occurs next week and the last day of the month, he said.

 

Cash hog prices were under pressure throughout the week and have lost a little more ground each day. The USDA's daily national dressed hog price reports show a loss of about US$2 per hundredweight for the week, as of midday Friday. The terminal markets traded from US$1 to as much as US$4 lower on a live basis.

 

Producer losses are mounting due to the combination of low hog prices and very high feed costs. Liquidation of sows appears to be under way based on slaughter figures, declining sow prices and reports that sow processors have been forward booked on supplies up to a week out.

 

There are mixed opinions among market analysts and livestock dealers for price direction in the next two weeks. Some predict at best a flat market for the period due to expectations that slaughter-ready hog supplies will remain large. They also said increased sow liquidation would push even more pork onto the already burdensome supplies.

 

However, others expect barrow and gilt supplies to tighten slightly, which could provide just enough of a spark to pull prices up a bit and initiate the spring rally.

 

Consumer demand for pork along with packer demand for the live hogs remains strong, Grimes said. He and fellow University of Missouri economist Ron Plain calculate demand for meats and livestock using a three-month rolling average.

 

In the latest calculations which are for December through February, Grimes said consumer demand for pork was up 5 percent from the same period a year ago. Packer demand for hogs was up 8.2 percent in the period, he said.

 

Meanwhile, consumer demand for beef slipped by 2.8 percent from the previous year, but packer demand for live cattle was up 1.8 percent, Grimes said.

 

The USDA on Thursday reported its monthly cold storage data for end February. The report showed total pork stocks at 603.244 million pounds, the largest on record for any month. The latest figure was up 32.9 million pounds from the previous month, compared with a five-year average increase of 4.2 million, said Rich Nelson, director of research at Allendale Inc.

 

Some US analysts and pork industry participants said the rise in cold storage stocks in February might also be linked to delayed shipments of pork destined for international markets. Dow Jones Newswires reported earlier this month a shortage of shipping containers and railcars along with cargo space for meat and poultry export shipments. Some packers and exporters reported that some shipments had been delayed up to a month.

 

Livestock producers, meat processors and supermarket chains are hoping for better business with the arrival of the Spring season.

 

The USDA estimated total beef, pork and lamb production for the week at 975.5 million pounds. Last week's output was 964.1 million, and the year-ago figure was 917.9 million pounds.