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Pork Commentary - The deluge of hogs just keep coming and coming.

by 5m Editor
8 November 2007, at 5:14pm

CANADA - It’s been 5 consecutive weeks of the highest U.S. marketing’s ever. Last week it was 2.322 million hogs, the same week a year ago was 2.187 million.

The extra 150,000 hogs a week are filling the pork retail, export and foodservice pipeline to the maximum. The only relief we see is that over the last three weeks Iowa-Minnesota weights have held steady contrary to the normal seasonal increases. Small consolation but it could mean we have been pulling hogs ahead. Let’s hope so.

U.S. Pork Cut-outs last Thursday were 57.37 while Iowa-Minnesota average Friday was 50.35. The $0.07 spread would indicate that Packers are making money and they will continue to keep taking the hogs as they are being offered up. We all know slaughter numbers peak in the fall and there have been 2.3 million plus finishing spaces being emptied a week. There is no way pigs are available to back fill these finishing holes. This many pigs do not exist. That is why April Lean Hog futures are 65.05, all traders know the seasonal supply of hogs is a fact of life. Hang on if you can, its miserable and its no fun losing money but there is light at the end of the tunnel.

Sow Slaughter

The latest available Canada – USA combined sow slaughter was 66,800, the same week a year ago 67,000. That is a 2.82% increase. Year to date – Canada-USA combined sow slaughter is 2,674 million, 1.4% more than a year ago. In the coming weeks it will be important to watch weekly sow slaughter. We believe current sow slaughter levels are at a point that would indicate the combined Canada-USA breeding herd is not expanding. If weekly sow slaughter consistently pushes beyond 70,000 head a week we are sure liquidation would be under way.

Competing Meats Beef

Beef cow slaughter is up 6.8% year to date. Good sign the U.S. Beef cow herd could be declining – in the meantime the extra slaughter cows put more beef on the market. There are 165,000 more cows gone to slaughter this year. The price of beef is the same as a year ago around $0.90/lb despite recent beef marketing up 4%.

Chicken

Chicken slaughter is now running up 2% year over year. Egg sets are up 4%. Chicks placed up 3%. Chicken prices are running $0.71/lb, a year ago $0.65/lb. Chicken supply is obviously increasing.

More Beef, more Chicken and more Pork. There is no lack of meat protein.

US Weekly Increase in Meat Production
Most Recent Weekly
Beef plus 23 million lbs
Pork plus 25 million lbs
Chicken Plus 56 million
Turkey plus 14 million lbs
Total Increase In Meat Protein Production 112 million lbs.

112 million lbs increase in U.S. Weekly meat production. That is a lot of extra meat to consume and export. It’s a 1/3 of a lb. more meat per week for every American, or 17 lbs more per year per capita. All meats better have dandy exports because shoving an extra 17 lbs into every American a year is near impossible. Its hard to comprehend what the total meat production would be if the feed price had not increased.

The big advantage U.S. meat protein producers have currently is the low U.S. dollar which is enhancing exports for all meats. All U.S. products are now more competitive in world markets. The extra meat being produced will move but the U.S. at these extra production levels is increasingly becoming dependent on the vagaries of world market demand and conditions.

The big upside – the world population is increasing with greater buying power and they want more meat. We have the ability to supply.

5m Editor