Market hog prices are rising seasonally as slaughter declines, but prices also may be nearing a seasonal top as higher dressed weights produce more pork that will have a harder time finding export demand, according to an analysis in the “National Hog Farmer.”
The story by University of Missouri Professor Emeritus, Ron Plain, said cash hog prices Friday averaged $82.35 per cwt, $6.01 more than the week before, $13.11 more than the first week of June and $18.91 higher than a month earlier.
The lean hog futures market anticipates steady to higher prices for the next several weeks, Plain said. When Jun expired on Thursday, the Jul contract was trading $0.45 per cwt higher than Jun, but Aug was $2.57 under Jun.
SLAUGHTER DOWN
Hog slaughter last week was only 2.215 million head, down 2.5% from the week before, down 5.3% from a month ago and the smallest for a non-holiday week since the week ended July 22, 2017, Plain said. And last Saturday’s kill was only 21,000 head, the smallest Saturday number since June 24, 2017.
He said slaughter likely would remain light for three more weeks before beginning a long seasonal uptrend.
SLAUGHTER WEIGHTS UP
Heavy slaughter weights were offsetting some of the decline in hog slaughter, Plain said.
Last week, hog slaughter was up 1.7% year-over-year, but because of the heavier weights, the USDA’s estimated pork production was up 3.8%.
Hot weather was expected to keep market weights down in coming weeks, he said. The lightest dressed weights of the year typically come in August.
USDA REPORT COULD SHOW SLOWING HERD GROWTH
The June quarterly USDA Hogs and Pigs report is to be released June 28, and large revisions are thought unlikely, Plain said. March-through-May hog slaughter was up 3.4%, exactly what the March inventory report predicted.
The March report implied a June-to-August slaughter 3.14% higher than last year, and during the first two weeks of June, the kill was up 2.4%. The recent dip in marketings could be temporary as producers tried to await higher prices.
Plain said he did expect the report to show a slowing of herd growth. Historically, breeding decisions have responded to profitability in the last four to six months, and prices have been unprofitable in seven of the last nine weeks.
PORK EXPORTS UP
April pork exports were a record 547.9 million pounds, up 18.4% from April 2017, mostly on large increases in shipments to Mexico, South Korea, Columbia and China, Plain said. Exports equaled 25.6% of US production, the highest for any month since May 2009.
What Plain did not say was how challenged US pork exports will be with a trade war heating up.
CATTLE, BEEF RECAP
No fed cattle sold last Wednesday on the Livestock Exchange Video Auction, versus sales two weeks previous at $110 per cwt.
Limited cash trade was reported at $180 per cwt on a dressed basis last Wednesday, down $4 from the previous week. Live-basis cash action was seen at $110 to $113, down $2 to $4.
The USDA choice cutout Tuesday was down $1.01 per cwt at $219.70, while select was off $1.90 at $202.30. The choice/select spread widened to $17.40 from $16.51 with 98 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday, was $141.48 per cwt, up $0.20. This compares with Tuesday’s Aug settlement of $149.62, up $0.65.