October 15, 2007

 

US pork prices gain 2.5 percent on week despite record hog slaughter

 

 

The US Department of Agriculture's pork carcass composite value, commonly known as the pork cutout, posted gains for three consecutive days to end the week 2.5 percent above the previous Friday's (October 12) level, despite back-to-back record slaughter weeks.

 

USDA reported the cutout figure Friday at US$61.84 per hundredweight, compared with US$60.35 on October 5. Meanwhile, US hog slaughter this week was estimated at a whopping 2.348 million head, exceeding the previous high, hit just last week. This week's slaughter was up 8.7 percent from a year ago, and the month-to-date slaughter is up 8.3 percent.

 

Market analysts said demand for pork has been surprisingly strong given the huge output, which so far has prevented the market from collapsing under the weight of record large production.

 

However, futures traders pushed lean hog futures down sharply Friday with December hitting an 11 1/2-month low.

 

Glenn Grimes and Ron Plain, agricultural economists at the University of Missouri, in their weekly hog outlook report released Friday, said consumer demand for pork and packer demand for live hogs remain above a year ago levels. For January through August, the latest data available, demand for pork at the consumer level is up 1.9 percent, while live hog demand for the same period is up 3.3 percent.

 

Grimes and Plain said most of the strength in live hog demand this year is coming from the domestic market.

 

Export pork sales during the first half of the year were sluggish and through June were down about 5 percent from a year ago. However, sales have seen a rebound in the past two months.

 

The US Meat Export Federation's data for August show total pork exports, which includes pork variety meats such as hearts and kidneys, were up about 9.3 percent from a year ago. Some of the key markets in which sales were up for that month from a year ago include Japan, China/Hong Kong, Canada, and Russia.

 

The gain in August sales drew the year-to-date figure closer to a year ago, but there is still a 3 percentage-point gap to make up. Market analysts and brokers said given the weak US dollar and lower prices now seen for most cuts amid record-large output, there is a reasonably good chance that exports during the final four months of the year will be up enough to push the yearly total above that of 2006 and extend the multi-year record of expanding international sales.

 

Beef and beef variety meat exports for the first eight months are up 16 percent from a year ago after August saw growth of nearly 19 percent, according to the USMEF data. The value of the beef exports for January-August is up 28 percent from a year ago.

 

US cattle slaughter for the week was estimated at 639,000 head, compared with 672,000 a week ago and 621,000 a year ago. Year-to-date slaughter stands at 26.596 million head, up 1.4 percent from a year ago.

 

The year-to-date hog slaughter is estimated at 82.697 million head, up 2.9 percent from a year ago.

 

The USDA estimated total beef, pork and lamb production for the week at 977.9 million pounds. Last week's output was 996.6 million, and the year-ago figure was 925.4 million. Year-to-date combined meat output is 37.295 billion pounds, up 1.6 percent from last year.

 

Broiler/fryer slaughter for the week was estimated at 167.043 million head, compared with 171.257 million a week ago and 161.719 million a year ago.