November 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.

The number of hogs slaughtered under federal inspection in the United States for the week ending November 3, 2007, was estimated at 2.324 million head, up 6.3 per cent from 2.187 million head over the same period in 2006.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.229 million head per week, about 5.9 per cent higher than over the same period a year ago. (Table#1) Slaughter numbers over the last four weeks have averaged 2.329 million head, up 6.7 per cent over the same period a year ago.

Table 1: United States Weekly Hog Slaughter

Source: USDA

Total pork production over the last eight weeks was estimated to average almost 458 million pounds per week, up 5.9 per cent from 432 million pounds per week over the same time period in 2006. Total pork production over the last four weeks was 468 million pounds, up about 6.8 per cent compared to the same four-week period a year ago.

In Canada, federal and provincial hog slaughter numbers over the seven weeks ending October 27, 2007, averaged 421,594 head, down 1.1 per cent from 426,436 head for the seven weeks ending October 28, 2006.  In Canada, hogs slaughtered year-to-date ending October 27, 2007, totaled 17.408 million head, down 2.8 per cent from 17.917 million head over the same period in 2006.

In Western Canada, federal and provincial hog slaughter numbers for the seven weeks ending October 27, 2007, averaged 161,294 head, down 5.8 per cent from 171,240 head for the seven weeks ending October 28, 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 October 27, 2007, totaled 6.821 million head, down 7.9 per cent from 7.410 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 123,421 head per week over the seven weeks ending October 27, 2007, up 10.7 per cent or 11,969 head per week compared to 111,452 head per week over the seven weeks ending October 28, 2006. Year-to-date ending October 27, 2007, total weanling and feeder hog exports to the United States have totaled 5.211 million head, up 7.6 per cent from 4.844 million head over the same period in 2006.   

Canadian slaughter weight hog exports to the United States averaged 67,145 head per week over the seven weeks ending October 27, 2007, up 4.5 per cent or 2,915 head per week from 64,231 head per week over the seven weeks ending October 28, 2006.  Year-to-date ending October 27, 2007, total slaughter weight hog exports to the United States have totaled 2.516 million head, up 14.9 per cent from 2.189 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 October 27, 2007, averaged 612,160 head per week, up 1.67 per cent from 602,118 head per week over the seven weeks ending October 28, 2006. Year-to-date ending October 27, 2007, combined Canadian hog slaughter and total live hog exports to the United States totaled 25.135 million head, up 0.74 per cent from 24.950 million head a year ago.

According to the latest Statistics Canada hog inventory report, the total inventory of hogs in Canada on October 1, 2007, was 14.437 million head, down 3.1 per cent from 14.900 million head on October 1, 2006, and down 1.7 per cent from 14.693 million head on July 1, 2007. Total Canadian hog inventory has declined since peaking at 15.205 million head on October 1, 2005, and is expected to further decline in 2008.

The Canadian market herd inventory on October 1, 2007, was estimated at 12.877 million head, down 3.3 per cent from 13.318 million head on October 1, 2006, and down 1.9 per cent from 13.122 million head on July 1, 2007. In Western Canada, the market herd inventory on October 1, 2007, was 5.574 million head, down 3.4 per cent from 5.772 million head on October 1, 2006, and down 2.6 per cent from 5.722 million head on July 1, 2007.   Increased exports of live weanlings and feeder hogs to the United States over the year are partially responsible for the annual decrease.

The Canadian breeding herd, consisting of sows and bred gilts, was estimated at 1.527 million head on October 1, 2007, down 1.4 per cent from 1.549 million head on

October 1, 2006, and down 0.7 per cent from 1.538 million head on July 1, 2007.  In Western Canada, the breeding herd of sows and bred gilts was estimated at 696,200 head on October 1, 2007, down 1.0 per cent from 703,200 head on October 1, 2006, and down 1.2 per cent from 704,700 head on July 1, 2007. The Canadian breeding herd has continued to decline and, with the current financial losses in the industry, will decline further in 2008.

According to Statistics Canada, total farrowing numbers in Canada for the first three quarters of 2007 were 2,437,300 head, down 1.9 per cent from the same three quarters in 2006.  Estimated farrowing numbers for the fourth quarter of 2007 are 833,000 head, down 1.5 per cent from the same quarter in 2006. (Table#2) Overall, farrowing numbers in 2007 are estimated at 3,270,300 head, down about 1.8 per cent from 2006.  The number of pigs born during the first three quarters of 2007 was 26,100,600 head, down almost 1.2 per cent from the same quarters in 2006. 

Table 2: Sows Farrowing and Pigs Born, Canada (thousand head)

(1) Estimated Farrowing Intentions
Source: Statistics Canada, Oct 2007

In Western Canada, the total number of sows that farrowed in the first three quarters of 2007 was 1,230,700 head, down slightly from 1,233,800 head over the same three quarters in 2006. Farrowing numbers for the first and third quarters were down, while the farrowing numbers for the second quarter were up. (Table#3) Farrowing intentions for the fourth quarter of 2007 is estimated at 413,500 head, up slightly from the same quarter in 2006. Overall, farrowing numbers in Western Canada for 2007 are estimated to be relatively flat from 2006. The total number of pigs born in Western Canada for the first three quarters of 2007 was 13,461,400 head, up 1.0 per cent from 13,328,200 head born over the same quarters in 2006.

Table 3: Sows Farrowing and Pigs Born, Western Canada

(1) Estimated Farrowing Intentions
Source: Statistics Canada, Oct 2007

The pork cutout value (185 lb.) in the United States ended the week of November 3, 2007, averaging $57.63 per cwt., down $2.77 cwt. or 4.6 per cent from $60.40 per cwt. the previous week, and down $9.17 per cwt. or 13.7 per cent from $66.80 per cwt. a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $44.81, down $5.30 per cwt. or 10.6 per cent from $50.11 per cwt. the previous week, and down $21.55 per cwt. or 32.5 per cent from $66.36 per cwt. a year ago. Loins (51 to 52 per cent lean) averaged $73.37 per cwt., down $2.76 per cwt. or 3.6 per cent from $76.13 per cwt. the previous week, and down $2.45 per cwt. or 3.2 per cent from $75.82 per cwt. a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $69.67 per cwt., down $0.53 per cwt. or 0.8 per cent from $70.20 per cwt. the previous week, and down $8.99 per cwt. or 11.4 per cent from $78.66 per cwt. a year ago. Cutouts for the week were all lower, with hams particularly taking a big hit. (Table#4) (Source: Livestock Marketing Information Center)

Table 4: United States Weekly Pork Price Summary (Weekly Average)

Source: Livestock Marketing Information Center

The United States' pork stocks in cold storage totaled 478.1 million pounds on

September 30, 2007, up 4.3 per cent from 458.3 million pounds on August 31, 2007, and up 4.3 per cent from 458.4 million pounds on September 31, 2006.  Stocks of hams, loins, ribs and buts have increased from August, while bellies have declined. Hams are up 38.2 per cent from a year ago, while bellies are up 67.4 per cent from a year ago.

The United States' beef stocks in cold storage totaled 486.9 million pounds on September 30, 2007, up 1.5 per cent from 479.7 million pounds on August 31, 2007, but down 1.0 per cent from 491.9 million pounds on September 30, 2006.

The United States' poultry stocks in cold storage totaled 1,135.4 million pounds on September 30, 2007, up 1.8 per cent from 1,156.3 million pounds on August 31, 2007, but down 3.9 per cent from 1,180.8 million pounds on September 30, 2006.   

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 2.100 billion pounds on September 30, 2007, up slightly from August 2007, but down almost 1.4 per cent from September 2006. (Table #5) Overall, meat stocks have increased from the early part of 2007 when cold storage stocks were about 1.9 billion pounds.

Table 5: United States Stocks in Cold Storage (Frozen)

Source: NASS

North American cash hog prices (Iowa/Minn.) continue to trend downward in the fourth quarter of 2007 in response to increased U.S. hog slaughter numbers and reduced seasonal demand.  Pork in cold storage has increased from August, and was 4.3 per cent higher in September than last year's numbers.  Increased meat in U.S. cold storage is also putting overall pressure on meat prices.

The nearby lean hog futures market continues to trend lower as contract dates approach.  High hog slaughter numbers and anticipation of increased slaughter numbers in 2008 are putting pressure on hog futures.  We have seen significant downward pressure on December and February contracts since the end on September. (Table #6)

Table 6: United States Lean Hog Futures

Source: Chicago Mercantile Exchange

With fourth quarter U.S. slaughter numbers estimated to average over 29.2 million head per week (Grimes and Plain), we may continue to see some downward pressure on cash and future markets as slaughter numbers remain high 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 $80 to $90 per ckg. for the remainder of the fourth quarter of 2007, average between $90 to $100 per ckg. for first quarter of 2008, and increase in the second quarter of 2008 to average between $110 to $120 per ckg. The five-cent increase in the Canadian dollar against the U.S. dollar over the last two weeks has directly pushed Canadian hog prices down by about $5 per slaughter weight hog.  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. Global pork exports, local consumer demand for pork and U.S. weekly hog slaughter numbers will continue to be key factors influencing hog prices in the fourth quarter of 2007 and first quarter of 2008.