December 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.) have stabilized and have started trending upward, with prices ranging from US $49.76 per cwt. to US $54.43 per cwt. over the last two weeks. The Iowa/Minnesota carcass price on December 7 averaged US$54.43 per cwt., which is equivalent to just over $114 per ckg. (Cdn. $). The price of Saskatchewan SPI Index 100 hogs on Friday, December 7, ranged from $92 to $102 per ckg. ($100 to $111 per ckg. for Index 109), with last week's price averaging $96.20 per ckg., up from the previous week's average of $90.10 per ckg. The softening Canadian dollar over the last two weeks has been positive for Canadian hog prices. With low hog prices and high feed costs, hog producers continue to lose significant amounts of money.

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the United States for the week ending December 8, 2007, was estimated at 2.383 million head, up 12.6 per cent from 2.116 million head over the same period in 2006.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.313 million head per week, about 8.2 per cent higher than over the same period a year ago. (Table#1) Slaughter numbers over the last four weeks have averaged 2.294 million head, up 9.4 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 468 million pounds per week, up 8.3 per cent from 432 million pounds per week over the same time period in 2006. Total pork production over the last four weeks was 465 million pounds, up about 9.6 per cent compared to the same four-week period a year ago.

Canadian Hog Slaughter

In Canada, federal and provincial hog slaughter numbers over the seven weeks ending December 1, 2007, averaged 434,549 head, down 0.4 per cent from 436,457 head for the seven weeks ending December 2, 2006.  In Canada, hogs slaughtered year-to-date ending December 1, 2007, totaled 19.562 million head, down 2.6 per cent from 20.092 million head over the same period in 2006.

In Western Canada, federal and provincial hog slaughter numbers for the seven weeks ending December 1, 2007, averaged 160,293 head, down 6.8 per cent from 171,946 head for the seven weeks ending December 2, 2006.  In Western Canada, hogs slaughtered year-to-date ending December 1, 2007, totaled 7.603 million head, down 8.0 per cent from 8.267 million head over the same period in 2006. The main reason for the decline year to date was the closure of the Mitchell's plant in Saskatoon. The recent push for double-shifting at the Brandon plant, in conjunction with the closure of the Schneider's plant in Winnipeg, has increased Maple Leaf slaughter numbers in Brandon to 75,000 hogs per week from 50,000 hogs per week, more than the combined plants slaughtered before the changes. As the Brandon plant continues to expand its double shift, slaughter numbers should continue to increase and narrow the gap from last year.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 131,749 head per week over the seven weeks ending December 1, 2007, up 18.5 per cent or 20,596 head per week compared to 111,153 head per week over the seven weeks ending December 2, 2006. Year-to-date ending December 1, 2007, total weanling and feeder hog exports to the United States have totaled 5.890 million head, up 9.0 per cent from 5.404 million head over the same period in 2006.   

Canadian slaughter weight hog exports to the United States averaged 78,155 head per week over the seven weeks ending December 1, 2007, up 20.3 per cent or 13,201 head per week from 64,954 head per week over the seven weeks ending December 2, 2006.  Year-to-date ending December 1, 2007, total slaughter weight hog exports to the United States have totaled 2.931 million head, up 17.1 per cent from 2.502 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 December 1, 2007, averaged 644,453 head per week, up 5.2 per cent from 612,564 head per week over the seven weeks ending December 2, 2006. Year-to-date ending December 1, 2007, combined Canadian hog slaughter and total live hog exports to the United States totaled 28.383 million head, up almost 1.4 per cent from 27.999 million head a year ago. The recent increase in hog flow (5.2 per cent over last 7 weeks) and slaughter weight exports to the United States poses the question: is this the start of the liquidation phase in the Canadian sow herd? Large losses are starting to force many producers to close their operations.

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

The pork cutout value (185 lb.) in the United States ended the week of December 8, 2007, averaging $58.89 per cwt., down $0.63 cwt. or 1.1 per cent from $59.52 per cwt. the previous week, and down $6.90 per cwt. or 10.5 per cent from $65.79 per cwt. a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $51.19, up $1.41 per cwt. or 2.8 per cent from $49.78 per cwt. the previous week, but down $8.10 per cwt. or 13.7 per cent from $59.29 per cwt. a year ago. Loins (51 to 52 per cent lean) averaged $67.36 per cwt., down $3.30 per cwt. or 4.7 per cent from $70.66 per cwt. the previous week, and down $10.91 per cwt. or 13.9 per cent from $78.27 per cwt. a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $76.48 per cwt., down $0.83 per cwt. or 1.1 per cent from $77.31 per cwt. the previous week, and down $1.92 per cwt. or 2.5 per cent from $78.40 per cwt. a year ago. Cutouts for the week were all lower, except hams. (Table#2) (Source: Livestock Marketing Information Center)

Table 2: United States Weekly Pork Price Summary (Weekly Average)

Source: Livestock Marketing Information Center

Meat In Cold Storage

The United States' pork stocks in cold storage totaled 496.3 million pounds on

October 31, 2007, up 2.4 per cent from 484.9 million pounds on September 30, 2007, and up 1.6 per cent from 488.4 million pounds on October 31, 2006.  Stocks of bellies, loins, ribs and butts have increased from September, while hams have declined. Hams are up 23.9 per cent from a year ago, while bellies are up 30.1 per cent from a year ago.

The United States' beef stocks in cold storage totaled 492.9 million pounds on

October 31, 2007, up 1.5 per cent from 485.7 million pounds on September 30, 2007, and up 1.5 per cent from 485.7 million pounds on October 31, 2006.

The United States' poultry stocks in cold storage totaled 1,083.0 million pounds on

October 31, 2007, down 5.3 per cent from 1,143.8 million pounds on September 30, 2007, and down 4.4 per cent from 1,133.3 million pounds on October 31, 2006.  

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 2.072 billion pounds on October 31, 2007, down 2.0 per cent from September 2007, and down almost 1.7 per cent from October 2006. (Table #3)

Table 3: United States Stocks in Cold Storage (Frozen)

Source: NASS

Market Overview and Prices       

North American cash hog prices (Iowa/Minn.) stabilized over the last two weeks and have started to trend upward. Pork in cold storage had increased from September to October, and was 1.6 per cent higher than October 2006.  Weekly U.S. hog slaughter numbers continue to average over 2.3 million head per week in the fourth quarter and have peaked to date at 2.397 million head for the week ending December 1, 2007. Daily slaughter that week peaked at 444,000 head on Monday November 26, 2007.

According to Ron Plain and Glenn Grimes from the University of Iowa, the demand for all meats except broilers from January to October of 2007 was up from a year earlier.  The demand at the consumer level for pork was up 2.3 per cent over the 10-month period.  The demand for live hogs over the period was also up 3.2 per cent.

The nearby lean hog futures market has been relatively flat over the last two weeks trading in a narrow price range.  High hog slaughter numbers and anticipation of increased slaughter numbers in 2008 had put pressure on hog futures earlier in November. These nearby markets have rebounded slightly towards the end of November and into December. (Table #4)

Table 4: United States Lean Hog Futures

Source: Chicago Mercantile Exchange        

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 remainder of 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 $125 to $135 per ckg. We expect the commodity markets may continue to be volatile over the coming months, reflecting changes in supply and demand estimates. Changes in U.S. hog slaughter numbers will be important in determining market direction and pricing. The drop in the Canadian dollar against the U.S. dollar over the last two weeks has directly pushed Canadian hog prices up.  U.S. weekly hog slaughter numbers and changes in the value of the Canadian dollar will continue to be key factors determining where Canadian hog prices go for the remainder of 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 into 2008.

For more information contact the Livestock Development Branch:

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