October 2007

This information is provided as a resource by SAF staff.  All stated prices are averages.
All prices are in Canadian dollars unless otherwise noted.
Please use this information at your own risk.

North American daily average hog prices (carcass - Iowa/Minn.) continue to trend downward, with prices ranging from US $61.98 per cwt. to US $55.57 per cwt. over the last two weeks. The Iowa/Minnesota carcass price on October 5 averaged US$56.84 per cwt., which is equivalent to just over Cdn. $121 per ckg. The price of Saskatchewan SPI Index 100 hogs on Friday, October 5, ranged from $95 to $105 per ckg. ($104 to $114 per ckg. for Index 109), with this week's prices averaging $103 per ckg., down from the previous week's average of $110 per ckg., and down from $128.50 per ckg. for the same week last year.  The rapid rise in the Canadian dollar versus the U.S. dollar over the last month has been very negative on Canadian hog prices. With current prices, producers are losing big, and, as we go into the fourth quarter, prices could move downward even further.

United States Hog Production

The USDA's September 28, 2007, Quarterly Hogs and Pigs Report indicated that the total United States inventory of hogs and pigs on September 1, 2007, was 64.648 million head, up 2.8 per cent from 62.900 million head on June 1, 2007, and up 2.8 per cent from 62.914 million head on September 1, 2006. The March and June 2007 hog numbers were revised upward (0.6 and 0.2 per cent, respectively) from the June 2007 report, with the increase coming from the market inventory numbers.

The market hog inventory on September 1, 2007, was 58.503 million head, up 3.0 per cent from 56.784 million head on June 1, 2007, and up 2.9 per cent from 56.835 million head on September 1, 2006. The March 1, 2007 hog market inventory numbers were revised upward by 350,000 head and the June 1, 2007 hog market inventory numbers were revised upward by 150,000 head, from the June 2007 Quarterly Hogs and Pigs Report.  

The total breeding inventory in the United States on September 1, 2007, was 6.145 million head, up about 0.5 per cent from 6.116 million head on June 1, 2007, and up 1.1 per cent from 6.079 million head on September 1, 2006.

The June to August 2007 U.S. pig crop was 27.452 million head, up 934,000 head or 3.5 per cent from the same period in 2006, and up 3.8 per cent from the same period in 2005. (Table#1) The December to February 2007 pig crop numbers were revised upward by 183,000 head to 26.393 million head from the June 2007 Quarterly Hogs and Pigs Report. The U.S. pig crop over the last four quarters is up 2.8 per cent from the same period a year ago.

(1) December preceding year
Source: USDA Hogs and Pigs Report, September 2007

The number of sows farrowing during June to August 2007 was 2.986 million, up 2.5

per cent from 2.912 million head during June to August 2006, and up 2.3 per cent from 2.918 million head during June to August 2005. (Table#2) The June to August 2007 farrowing numbers were revised upward by about one per cent from the June 2007 Quarterly Hogs and Pigs Report.  Farrowing numbers for the December to February quarters have also been revised up from the June 2007 Quarterly Hogs and Pigs Report. Actual farrowing numbers for the four quarters ending August 2007 were up almost 2.0 per cent from the same period a year ago.

 (1) December preceding year.
 (2) Farrowing Intentions.
Source: USDA Hogs and Pigs Report, September 2007

Farrowing intentions for the September to November 2007 period have been revised upward slightly from the June report (2.960 million head), and are now estimated at 2.964 million head, up 0.5 per cent from 2.949 million head over the same period in 2006. Farrowing intentions for the December to February 2008 period are estimated at 2.943 million head, up 1.3 per cent from 2.905 million head over the same period a year ago.  

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the United States for the week ending October 6, 2007, was estimated at 2.321 million head, up 8.0 per cent from 2.149 million head over the same period in 2006.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.138 million head per week, about 3.8 per cent higher than over the same period a year ago. (Table#3) Slaughter numbers over the last four weeks have averaged 2.254 million head, up 5.3 per cent over the same period a year ago.

Source: USDA

Total pork production over the last eight weeks was estimated to average over 422 million pounds per week, up 3.7 per cent from 407 million pounds per week over the same time period in 2006. Total pork production over the last four weeks was up about five per cent compared to over the same period a year ago.

Canadian Hog Slaughter

In Canada, federal and provincial hog slaughter numbers over the seven weeks ending September 29, 2007, averaged 408,395 head, down 2.4 per cent from 418,509 head for the seven weeks ending September 30, 2006.  In Canada, hogs slaughtered year-to-date ending September 29, 2007, totaled 15.778 million head, down 2.8 per cent from 16.237 million head over the same period in 2006.

In Western Canada, federal and provincial hog slaughter numbers for the seven weeks ending September 29, 2007, averaged 156,938 head, down 8.1 per cent from 170,778 head for the seven weeks ending September 30, 2006.  Closure of the Mitchell's slaughter plant in Saskatoon on June 1, 2007, is the main reason for the decline.  In Western Canada, hogs slaughtered year-to-date ending September 29, 2007, totaled 6.194 million head, down 8.1 per cent from 6.740 million head over the same period in 2006.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 124,986 head per week over the seven weeks ending September 29, 2007, up 8.5 per cent or 9,778 head per week compared to 115,208 head per week over the seven weeks ending September 30, 2006. Year-to-date ending September 29, 2007, total weanling and feeder hog exports to the United States have totaled 4.741 million head, up 7.8 per cent from 4.400 million head over the same period in 2006.   

Canadian slaughter weight hog exports to the United States averaged 64,926 head per week over the seven weeks ending September 29, 2007, up 17.2 per cent or 9,526 head per week from 55,400 head per week over the seven weeks ending September 30, 2006. The increase in slaughter weight hog exports is primarily due to the closure of the Mitchell's plant in Saskatoon.  Year-to-date ending September 29, 2007, total slaughter weight hog exports to the United States have totaled 2.239 million head, up 16.8 per cent from 1.917 million head over the same period in 2006.  

Combined weekly Canadian hog slaughter and total live hog exports to the United States over the seven-week period ending September 29, 2007, averaged 598,307 head per week, up 1.56 per cent from 589,116 head per week over the seven weeks ending September 30, 2006. Year-to-date ending September 29, 2007, combined Canadian hog slaughter and total live hog exports to the United States totaled 22.758 million head, up 0.90 per cent from 22.553 million head a year ago.

Pork Cutout Values (All prices in U.S. dollars)

The pork cutout value (185 lb.) in the United States ended the week of October 6, 2007, averaging $60.97 per cwt., down $1.39 cwt. or 2.2 per cent from $62.36 per cwt the previous week, and down $6.48 per cwt. or 9.6 per cent from $67.45 per cwt. a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $48.70, down $0.43 per cwt. or 0.9 per cent from $49.13 per cwt. the previous week, and down $22.19 per cwt. or 31.3 per cent from $70.89 per cwt. a year ago. Loins (51 to 52 per cent lean) averaged $76.09 per cwt., down $3.20 per cwt. or 4.0 per cent from $79.29 per cwt. the previous week, and down slightly from $76.22 per cwt. a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $73.33 per cwt., down $1.16 per cwt. or 1.6 per cent from $74.49 per cwt. the previous week, and down $3.09 per cwt. or 4.0 per cent from $76.42 per cwt. a year ago. Cutouts for the week were all lower. (Table#4) (Source: Livestock Marketing Information Center)

Source: Livestock Marketing Information Center

Meat In Cold Storage

The United States' pork stocks in cold storage totaled 457.9 million pounds on August 31, 2007, up slightly from 455.9 million pounds on July 31, 2007, but up 10.2 per cent from 415.6 million pounds on August 31, 2006.  Stocks of hams have increased from July, while bellies, loins and ribs have decreased. Hams are up 37.8 per cent from a year ago, while bellies are up 89.6 per cent from a year ago.

The United States' beef stocks in cold storage totaled 472.5 million pounds on August 31, 2007, up 1.3 per cent from 466.5 million pounds on July 31, 2007, but down 2.5 per cent from 484.5 million pounds on August 31, 2006.

The United States' poultry stocks in cold storage totaled 1,139.6 million pounds on August 31, 2007, down 1.6 per cent from 1,158.6 million pounds on July 31, 2007, and down 6.4 per cent from 1,218.0 million pounds on August 31, 2006. 

Total United States pork, beef, chicken and turkey stocks in cold storage totaled 2.062 billion pounds on August 31, 2007, down 0.5 per cent from July 2007 and down 2.3 per cent from August 2006. (Table #5)

Source: NASS

Market Overview and Prices       

North American cash hog prices (Iowa/Minn.) continue to trend downward into the fourth quarter of 2007 in response to increased U.S. hog slaughter numbers and reduced seasonal demand.  While pork in cold storage has decreased slightly from July to August, pork in cold storage continues to be 10.2 per cent higher than year ago numbers. 

In their October 1, Hogs and Pigs Report, Glenn Grimes and Ron Plain of the University of Missouri commented that the September 1 USDA's Quarterly Hogs and Pigs Report came in above average of the trade expectations, but mostly on the breeding herd. Grimes and Plain estimated that the demand for live hogs from January to August 2007 was up about 3.3 per cent from the same period a year ago, while U.S. consumer demand was up about 1.9 per cent over the same period.  While overall U.S. pork exports from January to July 2007 were down about 2.8 per cent from a year ago, pork exports in July were up about 2.1 per cent from a year ago. (Source: Grimes and Plain)

Grimes and Plain have adjusted their commercial hog slaughter numbers upward by 540,000 head for the fourth quarter of 2007 to 29.2 million head, and revised first quarter 2008 hog slaughter numbers upward by 324,000 head to 27.650 million head from their earlier estimates in July.  (Table #6) Increased slaughter numbers have also resulted in lower projected prices for the fourth quarter of 2007 and first quarter of 2008.  The U.S. will have record slaughter numbers in the fourth quarter of 2007 that could average 2.246 million head per week.

(p) Projections, (pe) Partial Estimate
Source: Glenn Grimes and Ron Plain,
University of Missouri - Columbia (October 1, 2007)

The nearby lean hog futures market has trended lower over the last couple of weeks.  We have seen significant downward pressure on October and December contracts. Increased hog slaughter numbers continue to put pressure on future markets. (Table #7)

Source: Chicago Mercantile Exchange

With fourth quarter U.S. slaughter numbers estimated to average over 2.246 million head per week, we may continue to see some downward pressure on cash and future markets as slaughter numbers increase in the fourth quarter. We expect the commodity markets will continue to be volatile over the coming months, reflecting changes in supply and demand estimates.           

Based on current lean hog future prices and current U.S. hog slaughter numbers, Saskatchewan 100 Index hogs are estimated to average between $90 to $100 per ckg. for the fourth quarter of 2007, average between $100 to $110 per ckg. for first quarter of 2008, and increase in the second quarter of 2008 to average between $120 to $130 per ckg.  If U.S. weekly hog slaughter numbers continue to increase, we could expect further downward pressure on hog prices in the fourth quarter of 2007 and into 2008. The rapid rise in the Canadian dollar versus the U.S. dollar over the last month has put more downward pressure on Canadian hog prices. Global pork exports, local consumer demand for pork and U.S. weekly hog slaughter numbers will continue to be key factors influencing hog prices into the fourth quarter of 2007 and first quarter of 2008.

For more information contact the Livestock Development Branch:

Brad Marceniuk
Livestock Economist
933-5098
bmarceniuk@agr.gov.sk.ca