August 6, 2007

 

US hog slaughter continues torrid pace; pork prices slide

 

US hog slaughter continued at a torrid pace last week while wholesale pork prices fell further from the previous week.

 

The US Department of Agriculture estimated last week's hog total at 1.992 million head, which was up nearly 5.6 percent from a year ago and the largest weekly figure since early April.

 

Cash hog prices were generally flat for the week but saw some volatility day to day and across regional boundaries. Some packers sought additional supplies to fill their slaughter schedules while others were content with their inventories, so it was not uncommon at times to see both higher and lower quotes from various packers on a given day, according to analysts and livestock market managers.

 

While the plants' hog buyers were working to ensure sufficient supplies of animals were available to slaughter, wholesale pork prices reported by the USDA were declining. Fresh belly prices fell as most supplies overwhelmed the current level of demand from bacon processors.

 

Although there are a few weeks left in the peak consumption period for bacon, lettuce and tomato sandwiches, the larger-than-expected slaughter rates in recent weeks resulted in a sharp drop in the belly quotes. The USDA's primal cutout value for the belly category fell US$13.17 per hundredweight, or 13.3 percent, for the week. August pork belly futures fell the daily limit Wednesday through Friday and lost 1,065 points, or 11.7 percent, for the week.

 

The other pork primal cuts were lower as well this week but the declines averaged around US$3 per hundredweight for loins, butts and ribs while hams were only slightly weaker.

 

Speculation continues to run high in the pork sector of potentially large sales to China, and that contributed to further gains in lean hog futures prices in which October and December posted new contract highs Friday (August 3).

 

US cattle slaughter for the week was estimated at 671,000 head, compared with 668,000 a week ago and 629,000 a year ago. Year-to-date slaughter stands at 20.001 million head, up 1.6 percent from a year ago.

 

The USDA's year-to-date total for hog slaughter is 61.242 million head, up 2.3 percent from a year ago.

 

The USDA estimated total beef, pork and lamb production for the week at 922.4 million pounds. Last week's output was 915.3 million pounds. The year-ago output was 863.4 million pounds. Year-to-date combined meat output is 27.795 billion pounds, up 1.3 percent from last year.

 

Broiler/fryer slaughter for the week was estimated at 164.596 million head, compared with 164.418 million a week ago and 162.092 million a year ago.