Uncertainty and volatility in the wholesale pork market appear to be tearing at the fabric of butcher hog and feeder pig prices.
The weekly pork cutout value from the USDA’s Agricultural Marketing Service and compiled by the Livestock Marketing Information Center in Denver, diverged from last year in the last week of March and have shown extreme volatility since, the data showed. Prices even set a nearby high before dropping again.
The weekly national weighted average carcass price for hogs also dropped that same week, but the subsequent volatility has not been as extreme. Prices have fluctuated in similar fashion as the pork cutout but have not approached last year or the 2014-2018 average.
Prices for 40-pound feeder pigs haven’t shown the volatility of hog carcasses or slaughter-ready hogs, but they have continued to lose value almost every week.
PORK CUTOUT VOLATILITY
The weekly pork cutout value diverged from last year in the last week of March as the COVID-19 pandemic hit and closed pork export markets. The week before the breakaway, the 2020 weekly price of $76.33 per cwt was above the $74.92 of the same week a year earlier.
The following week, the weekly pork cutout value was $79.20 per cwt, which was up $2.87, or 3.76%, from $76.33 the previous week but $1.89, or 2.33%, below the $81.09 of a year earlier.
From there, the weekly price dropped to $62.88 per cwt the first week of April, down $16.32 or 20.1%, in one week. This new price also was off $18.76, or 23.0%, from $81.64 a year earlier.
The latest bottom came only one week later at $53.55 per cwt. This was down $30.55, or 36.3%, from $84.10 in the same week a year earlier.
Put another way, the hog carcass cutout had dropped $25.65 per cwt, or 32.4%, in value in just two weeks.
But it doesn’t end there. A week after hitting the near-term bottom, the cutout value rose to $54.81 per cwt, followed in succession by a price of $72.70, $94.05, $113.94 and finally peaking at $115.12 the third week of May and eclipsing last year’s price line and the previous five-year average.
Adding insult to injury, the carcass hog value fell again to $69.69 last week, a drop of $45.43, or 39.5%, in four weeks.
FEEDER PIG VALUE OFF ALL YEAR
Weekly average prices for 40-pound feeder pigs haven’t responded as dramatically to the pandemic and shifts in slaughter rates as have hog and hog carcass values. Feeder pigs have struggled all year, remaining below the prices of the corresponding weeks of 2019.
Things were looking up the second week of January when prices went up to $67.60 a head from $61.28 the first week of the year. But this turned out to be the best weekly price of the year so far as prices have worked unevenly lower to last week’s $46.36 a head.
CATTLE, BEEF RECAP
Cattle were sold in the Plains this week at $98 to $105 per cwt on a live basis, down $4 to $5 from last week. Dressed-basis trading was reported at $157 to $167 per cwt down $5.
The USDA choice cutout Thursday was down $4.37 per cwt at $213.56, while select was off $4.00 at $204.08. The choice/select spread narrowed to $9.48 from $9.85 with 183 loads of fabricated product sold into the spot market.
Ten heifer contracts were tendered for delivery Thursday against the Jun futures contract.
The CME Feeder Cattle index for the seven days ended Wednesday was $128.51 per cwt, up $0.10. This compares with Thursday’s Aug contract settlement of $132.97, down $0.60.