Wholesale ham prices have fallen victim to the feud among Congress and US President Donald Trump as Congress has yet to ratify the US-Mexico-Canada trade agreement, the Livestock Marketing Information Center said in a letter to Extension Service staff. Larger supplies also are pressuring prices.
Wholesale ham prices started the year at $0.45 per pound, basis 23- to 27-pound trimmed selected hams quoted by the USDA’s Agricultural Marketing Service. This is the lowest ham price for the first week of the year since 2009.
The last time weekly ham prices were this low was early October 2016.
SEASONALITIES HIGHER
Seasonally, ham prices move higher in January, then trend flatter for the balance of the quarter. Last year was unusual as priced trended lower after late January.
Ham prices last week were 21% lower than a year ago, and double-digit percentage declines in ham prices year-over-year have been standard since May.
The biggest percentage decline was in July with a 28% drop.
EXPORT SUPPORT
In general, declines in ham prices have been supportive of exports and expanded domestic use.
Annual ham prices in 2016 and 2017 averaged $0.64 to $0.65 a pound for an annual average, allowing domestic ham consumption to increase by 1% per year, or stay steady on a per capita basis.
Ham domestic disappearance through October last year was on pace to increase by another 1%, but prices averaged $0.56 for the year and $0.57 for January-October, which is an unusually large price decline for the sake of only a small gain in consumption.
PORK PRODUCTION UP
Annually, pork production increased by 10% from 2013 through 2017 with 2014 being the only year of decline, which was because of Porcine Epidemic Diarrhea. Ham production would be up by a similar amount based on stable yields of ham as a component of the hog carcass.
Pork production data for the first eleven months of 2018 is up 3% from the same interval in 2017. The supply of hams available to the domestic market was only up 1.2% during the January-November interval.
TRADE STAGGERS
Exports and imports of hams into international trade have moderated the availability of hams in the domestic market.
Data on US ham exports in 2018 is only available through October, because of the partial government shutdown, but ham exports during the first 10 months of the year were up 10.5% from the same interval in 2017, on a volume basis.
Ham exports were only slightly higher (+3.5%) in 2015 and 2016, but 2017 was up 13%. The biggest year-over-year increase in monthly ham exports during 2018 came in April (probably in anticipation of the retaliatory trade sanctions by Mexico), up 54% from the prior April.
From May through October, ham exports have been up 6%, and Mexico’s retaliatory tariffs has had a bearish effect on the US price of hams.
CATTLE, BEEF RECAP
Cash cattle traded last week at mostly $124 up to $125 per cwt on a live basis, up $1, and at $196 to $197 on a dressed basis, also up $1 from the previous week.
The USDA choice cutout Wednesday was up $0.87 per cwt at $217.21, while select was up $0.32 at $212.04. The choice/select spread widened to $5.17 from $4.62 with 84 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $141.58 per cwt, down $0.04. This compares with Wednesday’s Jan settlement of $143.02, up $1.97.