November 23, 2009

 

 

Wholesale pork prices have been choppy ahead of the Thanksgiving holiday but ended the week up slightly from last Friday's (November 20) quote.

 

Lower prices for most pork cuts aren't unusual in the week before Thanksgiving, since retailers feature fewer fresh meat products to make room for turkeys and other holiday favourites. The pork composite carcass value, commonly known in industry circles as the pork cutout, bucked the normal weak trend for this time of the year and was higher for four consecutive days late last week through Tuesday. On Wednesday, the cutout tumbled US$1.54 per hundred pounds, or 2.6 percent, and hit a three-week low but rallied Thursday and Friday.

 

In early November, wholesale prices moved above the year-ago quote for the first time since late March. The daily figures have remained above a year ago since Nov. 3, with the exception of one day.

 

In wiping out the gains of the previous four days and more, Wednesday's slide in pork prices raised concerns among some analysts and traders that the pork and hog markets had become overdone to the high side and that they might decline further. Others, however, viewed the mid-week break in pork values as a temporary setback caused by sales that were needed by some packers to clean up inventories ahead of Thanksgiving. A US$1.27 gain Friday to push the cutout value up for the week appeared to confirm the bullish view.

 

The reduced work schedule during the holiday week will trim slaughter by around 250,000 head from normal, which should support pork prices, analysts and dealers said. Increased retail featuring of pork, as well as beef, is expected into early and mid-December.

 

In addition, hog supplies have been slowly declining due to extended losses among producers for most of the past two years. Smaller supplies along with additional retail promotions, they said, could provide another spark for wholesale pork prices.

 

After new monthly records for US pork production were set in August and September, the US Department of Agriculture on Friday reported October pork output was down about 3% from a year ago.

 

Weekly slaughter rates so far in November are down about 1.3 percent from a year ago, but the monthly total may be up slightly from last year due to November having 20 weekdays and four Saturdays this year versus 19 weekdays and five Saturdays in 2008. Slaughter rates on weekdays so far this month have averaged about 428,000 head while Saturday kills have been running around 165,000 head, so having an extra weekday in November this year could more than offset the lower daily and weekly figures, putting the monthly total slightly above 2008.

 

The USDA's monthly cold storage data also were viewed as supportive for pork complex prices. Total pork stocks were about 20 million pounds under the pre-report expectations and down 7.9 million from a year ago. Analysts said the smaller pork stocks suggest that export sales in October were larger than had been expected. Bellies in storage came in slightly above the pre-report estimates but down 1.5 million from the previous month. That goes against a normal increase of about 3.0 million pounds for the month.

 

Last week's cattle slaughter was estimated at 631,000 head, compared with 625,000 a week ago and 636,000 a year ago. Year-to-date cattle slaughter is down 4.0 percent from a year ago.

 

The week's hog slaughter estimate was 2.322 million head, compared with 2.290 million a week ago and 2.368 million a year ago. For the year, hog slaughter is off 2.8 percent.

 

The USDA estimated total beef, pork and lamb production for the week at 970.8 million pounds. Last week's output was 963.7 million pounds, and the year-ago figure was 982.2 million pounds. Year-to-date combined meat output is down 2.5%.

 

Broiler/fryer slaughter for the week was estimated at 157.371 million head, compared with 158.130 million a week ago and 156.960 million a year ago.