1. Vol. 10, No. 166 / August 24, 2012
HOG SLAUGHTER, 7-DAY ROLLING TOTAL, JULY - DECEMBER
Market Comments 000 hea d
Latest Data Value is for Aug 23, 2012 (7-day total = 2.186 mil head)
2,700
Lean hog futures have pulled back sharply in the
last two trading sessions as market participants worry about 2,500
pork prices going into the fall. The nearby October Lean Hog con- +6.1% vs. 2011 2011
tract closed on Thursday at $72.575/cwt, 323 points or 4% lower 2,300
than just two days ago. This was a new contract low. The Decem-
ber contract also settled at a contract low of $70.6/cwt, about $10/ 2012
2,100
cwt lower than where it was at the beginning of the month. Hog
supplies seasonally increase in the fall (hence the seasonal dip in 2010
prices) but the recent jump in hog slaughter rates caught some by 1,900
surprise. Weekly hog slaughter is currently running about 6%
ahead of last year’s pace. Producers have accelerated marketings 1,700
as projected losses increase with each upward gyration in feed
values. From corn to soymeal to DDGs to wheat, feed inputs are 1,500
all sharply higher than a year ago and there is no benefit in wait- Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Dec-1
ing to bring hogs to market.
Part of the problem may be that producers slowed down Hog Carcass Weights, 7-day Moving Average
marketings in July and early August, benefiting from the rally in Base on Daily MPR Report, LM_HG201. Updated through Aug. 23, 2012
hog prices and the rise in the price of key wholesale items (bellies, 211
hams). Hog slaughter, based on weekly data, averaged about 1% 2012
below year ago in July. This was well under the 1-1.2% increase 209
implied by the June hog inventory survey. The slowdown did not
dressed carcass wt in pounds
do producers any favors. As marketings declined and hogs spent 207
a few more days on feed, hog weights responded and the results
205
can be seen in the attached chart. Based on the latest MPR data, +1.1% vs. 2011
hog weights are now averaging almost 202 pounds per carcass, 2.2
203
pounds or 1.1% higher than a year ago. Pork supplies are cur- 2010
rently running about 7% over year ago levels and this kind of in-
201
crease has proved difficult for the wholesale markets to digest.
Prices for a number of items, from trimmings to hams to pork 199
loins, are down sharply in order to clear the market. Trim values 2011
have taken a significant hit, wit the benchmark 72CL trim last 197
priced at around 61 cents per pound, 15% lower than where it was
trading last week. Hams, which tend to carry the carcass in Au-
gust and September, currently are trading at 71 cents per pound,
10% lower than were they were a week ago and some 20% lower Increasing sow slaughter rates will also add to the
than a year ago. Even pork bellies, an item that was flying high amount of pork coming to market in the coming weeks. Sow
for much of July and early August, have started to show weak- slaughter, reported with a two week lag, is currently running
ness. Bellies account for just 16% of the carcass but their strong about 7-10% above year ago and some expect the liquidation to
performance allowed to pork cutout to hold up until recently. be even larger in the fall. This could add an additional 3 MM
Normally belly prices decline into the fall and with most other pounds of pork (carcass wt basis) to the weekly tally of pork
items also performing poorly, the fear is that the cutout could de- production.
cline by more than previously thought.
The Daily Livestock Report is published by Steve Meyer and Len Steiner. To subscribe/unsubscribe visit www.dailylivestockreport.com.
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