June 4, 2007

 

Bigger US hog slaughters, slowed sales weigh on pork prices

 

 

Larger-than-expected daily US hog slaughters, which pushed the week's total to 2.8 percent above a year ago, and a post-holiday letdown in buying by grocers pressured wholesale pork prices from mid-week on.

 

The big daily kills this week also generated concerns that hog slaughter next week could handily exceed 1.9 million head and set a cautious tone in pork-complex prices for the month. In June last year, weekly US hog slaughters averaged 1.851 million, with the largest at 1.897 million, hit in the first full week.

 

Glenn Grimes and Ron Plain, agricultural economists at the University of Missouri, in their latest weekly pork outlook report said that "some industry observers expect weekly slaughters (in June) to be above 1.9 million head. If this occurs and the number is much above 1.9 million head, we may have had the high in hog prices for 2007."

 

Poultry market analysts predict that weekly broiler slaughter will begin to move up soon in actual terms and compared with a year ago based on larger egg sets and chicks placed numbers over the past 10 to 11 weeks. The increases, they said, are expected to be around 2.5 percent to 3.0 percent. Expectations of larger chicken output are weighing on broiler prices, with boneless/skinless breast prices late this week reported at US$1.60 to US$1.65 per pound, down US$0.15 to US$0.20 from highs hit earlier in the spring.

 

Cheaper chicken prices could weigh on the pork complex as well, analysts said.

 

If cash hog prices do rally over the next few weeks to challenge the highs hit in May and cause lean hog futures prices to bounce back as well, analysts along with commodity brokers recommend that producers lock in prices for at least a portion of their hogs to be delivered through the balance of the year and early 2008.

 

The US Department of Agriculture reported Friday's pork carcass composite value, or commonly known as the pork cutout, at US$74.18, down US$2.11, or 2.8 percent, for the week.

 

 

CATTLE/HOG SLAUGHTERS

 

US cattle slaughter for the week was estimated at 609,000 head, compared with 701,000 a week ago and 614,000 a year ago. Year-to-date slaughter stands at 13.918 million head, up 2.3 percent from a year ago.

 

The USDA estimated this week's hog slaughter at 1.72 million head, compared with 1.980 million a week ago and 1.673 million a year ago. The year-to-date total is 43.973 million head, up 1.9 percent from a year ago.

 

TOTAL MEAT PRODUCTION

 

The USDA estimated total beef, pork and lamb production for the week at 807.6 million pounds. Last week's output was 929.4 million pounds. The year-ago output was 812.0 million pounds. Year-to-date combined meat output is 19.610 billion pounds, up 1.3 percent from last year.

 

Broiler/fryer slaughter for the week was estimated at 152.623 million head, compared with 167.665 million a week ago and 142.908 million a year ago.