July 21, 2008
US pork prices hit four-year high; beef prices see-saw
US wholesale pork and beef prices see-sawed last week with pork rising to a four-year high, while choice and select beef quotes eroded from the nearly five-year highs hit a week ago.
Both of these meat wholesale markets have received support this summer from larger export sales driven in large part by a weak US dollar compared with other currencies and growing world demand for animal protein. The domestic demand has remained solid as well, despite consumers' concerns about the economy and record high energy prices, analysts said.
Market analysts and meat brokers said Russia and Mexico have been buying hams, which has pushed the bone-in value higher and above what the domestic boneless market would bear. The US Department of Agriculture's primal value for hams Thursday was $85.75 per hundredweight, compared with $63.13 a year ago.
USDA quoted the pork carcass value Thursday (July 17) at $83.07 per hundredweight, which was the highest since July 13, 2004. Analysts said the wide spread in prices that developed between beef and pork favoured an upward turn in pork and weaker beef prices to pull the spread back to a more normal range.
On July 10, USDA quoted the choice beef carcass composite value at $173.80, its highest since Oct. 28, 2003. The pork cutout July 10 was $80.82, which resulted in a spread of $92.98. Since then, choice beef prices have declined $4.13 to $169.67 Thursday while pork has gained $2.25 to $83.07. The adjustments have narrowed the beef/pork spread by $6.38 to $86.60. The year-to-date average for the spread is $84.75.
Some analysts and meat traders predict that in the near-term, pork prices could climb further and beef decline a bit more before retail and food service meat buyers adjust their purchases and features more in favour of beef.
Rich Nelson, director of research with Allendale Inc. in McHenry, Ill., predicts that while wholesale pork prices could move up from Thursday's quote, the carcass value this year probably won't go above the 2004 high of $87.88 set on May 17.
Record large hog and pork supplies are seen putting a cap on the current rally before the wholesale pork market reaches the 2004 high, analysts said.
Last week's cattle slaughter was estimated at 686,000 head, compared with 697,000 a week ago and 682,000 a year ago. Year-to-date cattle slaughter is up 1.1 percent from a year ago.
On the other hand, last week's hog slaughter was estimated at 2.145 million head, compared with 2.152 million last week and 1.958 million a year ago. Year-to-date hog slaughter is up 9.4 percent.
The USDA estimated total beef, pork and lamb production for the week at 958.9 million pounds. The other week's output was 968.1 million pounds, and the year-ago figure was 924.1 million pounds. Year-to-date combined meat output is up 5.2 percent.
Broiler fryer slaughter last week was estimated at 167.809 million head, compared with 171.673 million a week ago and 165.807 million a year ago.
