U.S. hog, pork prices resilient in face of record slaughters
KANSAS CITY (Dow Jones)--U.S. hog and wholesale pork prices are currently above year-ago levels despite summer slaughter rates running at a record-setting pace as strong demand keeps the extra supply in check.
The U.S. Department of Agriculture's national weighted average price for hogs Tuesday afternoon was $71.72, compared with $63.85 a year ago. For the month to date, prices have averaged slightly above the same period in 2006.
The latest pork cutout at $76.03 is also well above the year-ago figure of $70.39. The average for the month to date is down just slightly from a year ago.
Greg Wagner, director of marketing and risk management at Horizon Ag Strategies in Chicago, said "we've got some strong demand under the market, and it has remained solid despite the larger output."
Weekly Slaughter Record Set; Month On Track For New Record As Well
U.S. weekly hog slaughter last week set a new record, according to the USDA's preliminary figure of 1.961 million head, said Glenn Grimes, agricultural economist at the University of Missouri.
The previous record for July weekly slaughter was 1.948 million set last year. To give a sense on how large these kills are, it wasn't until 2004 that weekly hog slaughter reached 1.9 million in July. Last week's figure may not even hold the top spot long as this week's slaughter is projected to be even bigger.
As weekly slaughters set records, the monthly figure is also expected to reach a new high. Bob Brown, private analyst in Edmond, Okla., projects the month's slaughter at 8.4 million head, replacing the current record of 8.116 million set in 2003.
Year-to-date hog slaughter is running 2.1% above a year ago, according to USDA data.
Market analysts and livestock dealers say increased availability of vaccines for porcine circovirus associated disease has reduced death losses of growing pigs and improved overall performance, which is contributing to the increase in hogs available for slaughter.
Brown said increased imports of swine from Canada also are boosting U.S. slaughter. Based on feeder pig imports from four months ago that would now be available for slaughter, plus imported barrows, gilts, sows and boars sent directly to U.S. packing plants, the increase in imports has added about 36,000 more head per week to the slaughter this month than at this time last year.
The higher numbers haven't slowed packers as they have been able to move the additional pork through the domestic and international markets, Brown said. Also, the U.S. is importing less pork.
Brown and others said export sales overall and speculation of possible purchases of pork by China have provided price support.
The U.S. Meat Export Federation's web site shows international sales of pork and pork variety meats through the first five months of this year are down 5% from a year ago by volume but up 6% in value. Sales to Mexico are down 42,613 metric tons from a year ago, while total sales through May are off 29,346 tons. With the exception of Mexico, sales to the balance of the international markets combined are up about 2.4%.