October 8, 2007

 

Record US hog slaughter concerns some traders

 

 

This week, the US likely will slaughter 2.321 million hogs, the most ever for a given week, but the record worries hog traders who fear the large volume of pork could pressure product and then hog markets.

 

Once the final tally is in, slaughter is expected to burst the current record of 2.265 million set in late 1998.

 

Prices this week were supported by packer desires to trim per-unit costs through heavy plant use and to keep up with the large number of hogs coming to slaughter, the buyers said. Many were incredulous to see cash prices holding steady with mostly firm tones as the record slaughter week came to a close. Packers wanted more hogs for Saturday and Monday kill schedules.

 

However, by Thursday and Friday, pork cutout values began to subside, and Dow Jones' calculations of plant margins worked perilously close to even for those plants that buy most or all of their hogs on the open market.

 

Hog markets early next week are expected to hold about steady, but buyers said packer demand could taper as the week progresses, especially if abundant pork supplies pressure product markets and move plant margins into negative territory.

 

Private market analyst Bob Brown said this week's estimated pork production also is a record at 461.9 million pounds, versus the old record of about 452.6 million set the week ended Dec. 18, 2004.

 

In addition, red meat production, beef, pork, veal and lamb, is a record at 996.7 million pounds, up 2.4 percent from the previous record of 973.5 million set the week of Dec. 22, 2001, Brown said.

 

However, some like Brown say the effects of the increased production already are in the market. The meat has been sold, and prices are well below a year ago.

 

Brown said fears that this week's production will pressure prices are overdone, but prospects for continued heavy hog slaughter rates could keep prices moving lower in coming weeks.

 

"It'd be a rare thing if this was the lowest hog slaughter of the fall," Brown said. That usually happens later, between Thanksgiving and Christmas.

 

US cattle slaughter for the week was estimated at 672,000 head, compared with 650,000 a week ago and 635,000 a year ago. Year-to-date slaughter stands at 25.957 million head, up 1.4 percent from a year ago.

 

The week's hog slaughter was pegged at 2.321 million head, up 3.71 percent from the week-ago figure of 2.238 million and up 8.0 percent from 2.149 million a year ago.

 

Year-to-date hog slaughter is estimated at 80.349 million head, up 2.7 percent from a year ago.

 

The USDA estimated total beef, pork and lamb production for the week at 996.7 million pounds. Last week's output was 960.3 million. The year-ago figure was 933.6 million. Year-to-date combined meat output is 36.309 billion pounds, up 1.5% from last year.

 

Broiler/fryer slaughter for the week was estimated at 173.849 million head, compared with 170.377 million a week ago and 164.748 million a year ago.