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Weekly Review: Continued Weakness in Demand

by 5m Editor
31 January 2009, at 5:28am

US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

Demand for pork at the consumer level continues to be weak. For 2008, the consumer demand was down 3.5 per cent from 2007. Beef demand was also weak with a decline of 4.1 per cent last year from a year earlier. Live hog demand for 2008 was up 6 per cent from 12 months earlier. The big increase in exports of pork is the major reason for the strong live hog demand.

Consumer demand is likely to continue weak as we go through 2009 due to the weak general economy but smaller chicken supplies will be positive.

Gilt and sow slaughter data indicates producers are not changing the sow herd very much if any in either direction.

Based on weights of barrows and gilts in Iowa-Minnesota marketings are less current than they have been since June 2008. Weights for the week ending 24 January were above a year earlier for the first time since the week ending 14 June 2008.

The Iowa-Minnesota weights last week at 269 pounds were 0.6 pound below a week earlier but 0.4 pound above a year earlier. Barrow and gilt carcass weights were the same as a year earlier both of the weeks ending 10 and 17 January.

Because of bad weather conditions, United did not hold a sale of pigs this week. Nationally, feeder pigs were a little lower than a week earlier. Pigs 10-pound basis 50-54 per cent lean composite value between $41-42 per head. Pigs 40-pound basis were 50-54 per cent lean over $62 per head average. We believe we would rather be a seller than a buyer of pigs at these prices.

The weak consumer demand for pork continues to be reflected in pork cutout per cwt of carcass. The cutout Thursday afternoon at $57.00 per cwt was down $1.13 per cwt from a week earlier. Loins at $74.56 per cwt was down $1.36 per cwt, Boston butts at $60.20 per cwt was down $1.30 per cwt, hams at $38.98 per cwt was down $2.27 per cwt and bellies at $72.41 per cwt was down $1.71 per cwt from seven days earlier.

It continues to be unclear why packers are paying as much as they are for hogs with the current cutout. Hopefully it means exports are strong. The prices packers receive for exports are not included in the cutout values reported by the USDA.

The prices Friday morning for live hogs were steady to $1.75 per cwt lower compared to a week earlier. Weighted average negotiated carcass prices Friday morning were $0.25 higher to $0.99 per cwt lower compared to seven days earlier.

The top live prices Friday morning for select markets were: Peoria $35 per cwt, Zumbrota, Minnesota, $36 per cwt and interior Missouri $40 per cwt. The weighted average negotiated carcass prices by area Friday morning were: western Cornbelt $59.85 per cwt, eastern Cornbelt $54.71 per cwt, Iowa-Minnesota $59.84 per cwt and nation $56.46 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,267 thousand head down 0.3 per cent from a year earlier.