Pork Cutout High, Near Normal

The pork cutout value certainly is high, and it’s up in spite of high production, but the cutout is not out of line with historical averages.

As of the last week in June, the cutout was not quite up to the 2011-2015 average, even though production continued to run above last year and the 2011-2015 average.

Data from the USDA’s Agricultural Marketing Service that was compiled by the Livestock Marketing Information Center show the average pork cutout at $102.49 per cwt, compared with the five-year average of $103.92.  This is short of the average by $1.43, or 1.40%.

If the average trend is to be followed, it will turn down for two weeks and then climb to the annual high in the second week of August, although last year, the annual high came in the second week of July at $89.85.




The pork cutout is up despite this year’s higher production level.  Weekly pork production continues to decline seasonally, but remains above last year and the previous five-year average.

Preliminary projections put June’s Federally Inspected hog slaughter up 260,000 head, or 3.08%, from a year ago’s 8.455 million, at 8.715 million.  This is record-large for the month, said the LMIC’s Livestock Monitor.  The 2011-2015 average for June is 7.934 million head, putting this year’s preliminary production up 781,000, or 9.84%.

June’s pork production was kept in check by average hog carcass weights that were lighter than a year ago by about two pounds over the course of the month.

For the April-June quarter, the LMIC estimated US pork production increased about 3% from last year.




Importantly, that production increase did not need to be consumed entirely in the US domestic market because of robust exports, the LMIC said.  In fact, calculated per capita disappearance for the second quarter was below 2016 by nearly 1%.

Weekly slaughter hog prices rallied strongly in May and June, and for the first time since the end of March, climbed above a year ago in the second week of June when they reached $82.38 per cwt.  Prices remained above a year ago for the last three weeks of the month.

The latest Hogs and Pigs report provided some insights in terms of coming pork production, the LMIC said.  Based on the report, US pork production will continue to post year-over-year increases for at least the next several quarters.

The report put the total herd at 7.65 million head, versus the average of pre-report estimates at 7.50 million.  Animals kept for breeding was up 1.5%, and market hogs rose 3.6% to 65.58 million.




Fed cattle sales on the livestock exchange video auction last Wednesday were very limited.  Two sets of heifers, totaling 320 head, sold in Kansas at $119 and $119.25 per cwt, with an average of $119.52.  This was down $3.48 from the previous week’s average of $123.00.  One group of Nebraska cattle sold at $120.

Cash cattle traded last week at $118 to $120 per cwt, mostly $119, down $3 to $4 from the previous week.  On a dressed basis, cattle traded at $189 to $190, down $6.

The USDA’s choice cutout Monday was down $1.84 per cwt at $222.89, while select was off $0.97 at $207.45.  The choice/select spread narrowed to $15.44 from $16.31 with 105 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Friday was $147.99 per cwt, down $1.24.  This compares with Monday’s Aug settlement at $146.10, up $1.82.