November 12, 2007

 

US hog slaughter easily sets record, up 10 percent versus yearago

 

 

US federally inspected hog slaughter this week, estimated at 2.362 million head, was up 10 percent from a year ago and easily surpassed the previous high set the week-ended October 12 at 2.340 million.

 

Lower hog prices and firmer wholesale pork values expanded processing margins to their widest levels in two years, which encouraged packers to push more hogs through the plants this weekend. The Dow Jones Newswires packer margin index for Friday was at plus US$20.94 per head, and the week's average was plus US$16.83. Last week's average was plus US$4.64, and the year-to-date average is plus US$4.01 per head.

 

Market analysts said weekday slaughter rates recently have been running at or near capacity most of the time, so the only way to boost the weekly figure is by operating more plants on Saturday.

 

Wholesale pork prices climbed this week despite the record-large hog slaughter. The USDA's pork carcass composite value, commonly known as the pork cutout, on Friday afternoon was reported at US$59.37 per hundredweight, up US$2.06, or 3.6 percent, from a week ago.

 

The higher pork prices led to speculation by some traders and analysts that hog prices may be near a seasonal floor. Others, however, remain cautious amid expectations that losing a slaughter day on the Thanksgiving holiday could result in flat to soft cash hog prices throughout the balance of the month.

 

Glenn Grimes and Ron Plain, agricultural economists at the University of Missouri, in their weekly hog outlook report released Friday afternoon said "if these slaughter levels continue, which is our expectation, prices may be pushed lower in coming weeks than indicated by the futures market and most observers' forecasts."

 

Hog slaughter from the first of October through this week is up about 7 percent, Grimes and Plain said. Their initial forecast for slaughter in the fourth quarter - based on the September hogs and pigs report - was up 4.7 percent, with about 1.1 percentage points of the increase due to one more weekday in the quarter this year than in 2006. With the adjustment for the extra day, slaughter on a daily or weekly basis was expected to be up 3.3 percent. However, so far, the increase in slaughter is more than double the expectations.

 

USDA's boxed beef prices were slightly higher for the week. The choice beef quote for Friday is US$140.63, up from US$137.98 a week ago. Select beef prices ended the week at US$128.61, compared with US$127.60 last Friday.

 

Cattle/hog slaughters

 

US cattle slaughter for the week was estimated at 637,000 head, compared with 656,000 a week ago and 648,000 a year ago. Year-to-date slaughter stands at 29.232 million head, up 1.4 percent from a year ago.

 

Year-to-date hog slaughter is estimated at 92.055 million head, up 3.3 percent from a year ago.

 

Total meat production 

 

The USDA estimated total beef, pork and lamb production for the week at 986.2 million pounds. Last week's output was 992.4 million, and the year-ago figure was 946.5 million. Year-to-date combined meat output is 41.298 billion pounds, up 2.0 percent from last year.

 

Broiler/fryer slaughter for the week was estimated at 169.668 million head, compared with 168.915 million a week ago and 166.315 million a year ago.