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Weekly Review: Pork Demand Up at Consumer Level

by 5m Editor
1 August 2009, at 7:20am

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

Packers pushed hog slaughter under Federal Inspection well above 400 thousand per day; as a result, pork product prices were pushed lower. Pork prices Thursday afternoon at $59.09 per cwt of carcass were down $5.76 per cwt from a week earlier.

Demand for pork at the consumer level for January-June was up 4.2 per cent from the same months in 2008. Demand for beef at the consumer level was down 0.9 per cent, broiler demand at the consumer level was down 4.4 per cent and turkey demand was up 5 per cent for these six months compared to a year earlier.

Demand for live hogs for January-June was down 4.2 per cent from the same months in 2008. Demand for live fed cattle for January-June was down 6.9 per cent compared to the same months in 2008.

The weaker live hog demand than pork consumer demand was due to reduced exports and wider marketing margins at the processor-retailer level.

Sow slaughter continues to run low. For the four-week period ending 18 July, sow slaughter was down 9.2 per cent from a year earlier after adjusting for sow herd size. We still see no signs that the breeding herd is being reduced very much. Gilt slaughter for the four-week period ending 25 July was below a year earlier.

Even though profitability in the hog industry is quite negative, hog producers find it difficult to cut back in number with the large investment in the herd per sow.

It now looks like it will require bankruptcy by a substantial number of producers to get the sow herd reduced enough to get back in a profitable situation for the average cost producer.

Slaughter weights of barrows and gilts in Iowa-Minnesota for the week ending July 25 were up 0.1 pound per head from a week earlier and up a whopping seven pounds above a year earlier.

The cooler-than-normal July weather and packers cutting the bill to try to get product prices up are contributing to these heavier weights.

The average carcass weight for barrows and gilts for the week ending 18 July at 196 pounds was up 4 pounds from 12 months earlier. There are no questions about hog marketings being backed up some in the summer of 2009.

Prices for wholesale cuts of pork Thursday afternoon showed loins down $8.99 per cwt at $74.61 per cwt, Boston butts at $53.66 per cwt were down $6.35 per cwt, hams at $44.22 per cwt were down $8.30 per cwt and bellies at $84.11 per cwt were up $0.75 per cwt from seven days earlier.

National feeder pig prices last week were $2-4 per head higher than a week earlier.

Pigs weighing 10 pounds averaged $28.24 per head, 40-pound-basis pigs were at an average of $29.05 per head. Pigs weighing 10 pounds sold on formula averaged $34.07 per head, 40-pound-basis pigs formula priced were $50.20 per head. Negotiated or cash priced 10-pound-basis pigs sold for $17.46 per head and 40-pound-basis pigs on spot market sold for $27.79 per head.

United Producers feeder pig prices this week were $5-15 per cwt above two weeks ago. All of the United pigs weighed 50-60 pounds per head and all sold for $50-69 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,104 thousand head, up 0.5 per cent from 12 months earlier.

Live hog prices Friday morning were $2-3 per cwt below a week earlier. Top Peoria price was $34 per cwt and interior Missouri was $39.50 per cwt. Weighted average negotiated carcass prices ended the week $4.61-5.30 per cwt below seven days earlier. The weighted average negotiated carcass price in the western Cornbelt was $52.55 per cwt, eastern Cornbelt $52.40 per cwt, Iowa-Minnesota $52.72 and nation $52.41 per cwt.