February 2009

This information is provided as a resource by SMA 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.) over the last two weeks have traded in the US$54.56 to US$60.26 per cwt. range. The Iowa/Minnesota carcass price on Monday, February 9, averaged US$54.26 per cwt., which is equivalent to about C$139 per ckg. The price of Saskatchewan SPI Index 100 hogs on Monday, February 9, ranged from $121 to $131 per ckg. ($132 to $143 per ckg. for Index 109), with last week's price averaging $132.10 per ckg., flat from the previous week's average of $132.30 per ckg, but up from the same period a year ago of $97.60 per ckg.

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the United States for the week ending February 9, 2009, was estimated at 2.222 million head, up 1.2 per cent from 2.195 million head over the same period a year ago.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.179 million head per week, down about 2.4 per cent from 2.233 million head over the same period a year ago.

(Table #1) Slaughter numbers over the last four weeks averaged 2.260 million head, down 1.6 per cent from 2.296 million head over the same period a year ago. Pork production in the United States over the last eight weeks averaged about 444 million pounds per week, down about five per cent from the same period a year ago.

Table 1: United States Weekly Hog Slaughter

Source: USDA, LMIC

Canadian Hog Slaughter

In Canada, federal and provincial hog slaughter numbers over the three weeks ending January 31, 2009, averaged 444,950 head, up slightly from 444,723 head for the three weeks ending January 26, 2008.  In Western Canada, federal and provincial hog slaughter numbers for the three weeks ending January 31, 2009, averaged 165,717 head, up 2.8

per cent from 161,173 head for the three weeks ending January 26, 2008.  While hog slaughter numbers in 2008 were up about one per cent from 2007, slaughter numbers in the fourth quarter had increased by about three per cent from the fourth quarter in 2007. The drop in the value of the Canadian dollar versus the U.S. dollar has helped Canadian hog slaughter/processors be more competitive in the global market. Canadian hog slaughter numbers are expected to increase in 2009 if the value of the Canadian dollar versus the U.S. dollar remains low, and with continued market disruptions from COOL.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 97,897 head per week over the three weeks ending January 31, 2009, down 39.2 per cent or 63,077 head per week compared to 160,974 head per week over the three weeks ending January 26, 2008.

Canadian slaughter weight hog exports to the United States averaged 27,939 head per week over the three weeks ending January 31, 2009, down 70.1 per cent or 65,592 head per week from 93,532 head per week over the three weeks ending January 26, 2008. Canadian live hog exports have declined significantly after peaking late in 2007 and early 2008.

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

The pork cutout value (185 lb.) in the United States ended the week of February 7, 2009, averaging $56.98 per cwt., down $0.51 per cwt. or 0.9 per cent from $57.49 per cwt. the previous week, and down $3.84 per cwt. or 6.3 per cent from $60.82 per cwt. a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $38.96 per cwt., down $0.69 per cwt. or 1.7 per cent from $39.65 per cwt. the previous week, and down $13.22 per cwt. or 25.3 per cent from $52.18 per cwt. a year ago. Loins (51 to 52 per cent lean) averaged $74.79 per cwt., down $0.80 per cwt. or 1.1 per cent from $77.49 per cwt. the previous week, but up $1.38 per cwt. or 1.9 per cent from $73.41 per cwt. a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $72.33 per cwt., down $0.67 per cwt. or 0.9 per cent from $73.00 per cwt. the previous week, but down $6.43 per cwt. or 8.2 per cent from $78.76 per cwt. a year ago.

(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 549.0 million pounds on

December 31, 2008, up 7.1 per cent from 512.9 million pounds on November 30, 2008, and up 19.7 per cent from 458.7 million pounds on December 31, 2007.  Most pork stocks have increased since November, with the most significant increases occurring in bellies and ribs. Hams and picnics are the only pork stocks that have decreased since November.

The United States' beef stocks in cold storage totaled 481.7 million pounds on December 31, 2008, up 1.4 per cent from 474.9 million pounds on November 30, 2008, but down slightly from 482.5 million pounds on December 31, 2007.

The United States' poultry stocks in cold storage totaled 1,164.0 million pounds on December 31, 2008, down 0.8 per cent from 1,367.7 million pounds on November 30, 2008, but up 15.6 per cent from 1,007.3 million pounds on December 31, 2007. 

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 2.195 billion pounds on December 31, 2008, up 1.6 per cent from 2.161 billion pounds on November 30, 2008, but up 12.6 per cent from 1.948 billion pounds on December 31, 2007. (Table #3)

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

Source: NASS

Market Overview and Prices       

North American cash hog prices (Iowa/Minn.) have traded in US$54.56 to US$60.26 per cwt. range over the last two weeks. Cash prices have started to decline over the last week after average prices reached US$60.26 per cwt. on January 30, 2009. Pork cutout values overall have declined slightly over the last two weeks with hams continuing to be very weak. Pork in cold storage has increased from November to December, and is 19.7 per cent higher than a year ago. Total meat in U.S. cold storage has increased from November to December, with total meat supplies more than 246 million pounds or 12.6 per cent higher than a year ago. United States weekly hog slaughter numbers over the last four weeks were down 1.6 per cent, while slaughter numbers over the last eight weeks were down 2.4 per cent from the same period a year ago.

The lean hog futures contracts have declined since rebounding in early January as hog inventory numbers, pork in cold storage, and weekly hog slaughter numbers continue to be relatively high. Nearby lean hog prices have declined significantly over the last two weeks.  The announcement by the Russian Federation at the end of January that it has removed nine U.S. pork plants and one processed meat plant from its list of approved facilities for export was also negative for lean hog futures prices.  

Source: CME

Based on the current lean hog futures prices and Canadian exchange rate futures, the futures market is indicating that Saskatchewan Index 100 hogs could average between $125 to $135 per ckg. for the remainder of the first quarter of 2009, and average between $150 to $160 per ckg. for the second quarter of 2009. Price estimates have declined from a month ago due to the declining lean hog futures prices. Canadian market hog prices are expected to increase more than U.S. hog prices in 2009 primarily due to the decline in the value of the Canadian dollar versus the U.S. dollar. Fluctuations in the value of the Canadian dollar over the coming months could significantly change Canadian hog prices.

We expect the commodity markets will continue to be volatile over the coming months, reflecting changes in supply and demand estimates as U.S. slaughter numbers change. While we expect reductions in U.S. hog slaughter numbers during the first half of 2009, we also expect reductions in U.S. pork exports. Depending on where domestic pork supplies end up hog prices should increase in the first half of 2009. Total meat production in the U.S. and continuing levels of cold storage stocks will be important for meat and pork pricing in general, particularly if a global recession slows U.S. meat exports. Changes in U.S. weekly hog slaughter numbers will continue to be important in determining market direction and pricing. The global demand for pork, including U.S. pork exports, will be a key factor influencing North American hog prices in 2009.

For more information contact the Livestock Branch:
Brad Marceniuk
Livestock Economist
933-5098
Brad.Marceniuk@gov.sk.ca