December 14, 2009

 

US cash hog, pork prices increase with uncertainty ahead

Cash hog and wholesale pork surged this week amid the severe winter storm that slammed through the upper Midwest and disrupted livestock slaughter schedules.

 

Wholesale pork prices hit a 14-month high Friday at US$70.09 per hundred pounds. The cutout rallied US$4.99, or 7.7%, for the week. Meanwhile, cash hog prices as reported by the US Department of Agriculture's national average quotes gained US$4.13 during the week.

 

Wednesday's hog slaughter was trimmed by nearly 150,000 head, or roughly 35%, from the normal daily rate. Transportation on many of the highways and most country roads across Iowa and parts of neighbouring states was nearly shut down by heavy blowing snow and drifting. Once the wind subsided, farm lanes and roads then had to be cleared to enable livestock producers to ship their animals to the processing plants.

 

Slaughter schedules were reduced at some plants late Tuesday and early Thursday as well. Pork packers boosted their weekend operations to make up for part of the down time, but the week's total still came in around 60,000 head short of what had been expected at the beginning of the week. The shortage in slaughter meant about 12 million pounds less pork for shipment on orders this week.

 

The storm came in the final week of heavy production of smoked hams for the Christmas holiday. Since it takes several days for the fresh hams to be processed and shipped to the warehouses and grocery stores, processors are running out of time to get the hams to stores a week or so ahead of the holiday. This weekend will mark the end of the production period to get the hams to the stores in time.

 

The late push for fresh hams along with reduced slaughter sent prices for the ham portion of the pork cutout higher again at midweek after the market showed signs of wavering early in the week. Prices for the other cuts moved higher during the second half of the week.

 

Looking ahead, now that the roads have been cleared and producers are able deliver their livestock on time, slaughter schedules next week should return to normal. Some analysts and meat brokers said wholesale pork prices may hold at or near steady early next week due to this week's production shortfall. But, they predict prices for fresh hams especially to begin to be pressured by the middle of the week. Other cuts may struggle to hang on to the large price gains that were made this week as well, they said.

 

Others said the holiday-reduced slaughter schedules during the last two weeks of this month may help underpin wholesale pork values next week.

 

This week's cattle slaughter was estimated at 613,000 head, compared with 638,000 a week ago and 608,000 a year ago. Year-to-date cattle slaughter is down 3.8% from a year ago.

 

The week's hog slaughter estimate was 2.215 million head, compared with 2.267 million a week ago and 2.339 million a year ago. For the year, hog slaughter is off 2.9%.

  

The USDA estimated total beef, pork and lamb production for the week at 933.9 million pounds. Last week's output was 962.1 million pounds, and the year-ago figure was 955.0 million pounds. Year-to-date combined meat output is down 2.4%.

 

Broiler/fryer slaughter for the week was estimated at 158.619 million head, compared with 160.222 million a week ago and 158.061 million a year ago.