March 2009

This information is provided as a resource by Saskatchewan Agriculture 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$51.98 to US$61.17 per cwt. range. The Iowa/Minnesota carcass price on Tuesday, March 3, averaged US$56.88 per cwt., which is equivalent to over C$147 per ckg. The price of Saskatchewan SPI Index 100 hogs on Tuesday, March 3, ranged from $123 to $133 per ckg. ($134 to $145 per ckg. for Index 109). Average prices declined from the previous week, but have started to rebound over the last few days.

Source: SPI Marketing Group, LMIC

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the United States for the week ending February 28, 2009, was estimated at 2.179 million head, down 0.6 per cent from 2.191 million head over the same period a year ago.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.254 million head per week, down almost 1.2 per cent from 2.280 million head over the same period a year ago.

(Table #1) Slaughter numbers over the last four weeks averaged 2.210 million head, up slightly from 2.203 million head over the same period a year ago. Pork production in the United States over the last eight weeks averaged almost 460 million pounds per week, down about one 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 six weeks ending February 21, 2009, averaged 432,982 head, down 1.1 per cent from 437,699 head for the six weeks ending February 16, 2008.  In Western Canada, federal and provincial hog slaughter numbers for the six weeks ending February 21, 2009, averaged 158,436 head, down 1.2 per cent from 160,368 head for the six weeks ending February 16, 2008.  Canadian hog slaughter numbers are expected to increase in 2009 from 2008 as long as the value of the Canadian dollar versus the U.S. dollar remains low and global demand for pork remains strong.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 96,285 head per week over the six weeks ending February 21, 2009, down 38.8 per cent or 60,970 head per week compared to 157,255 head per week over the six weeks ending February 16, 2008.

Canadian slaughter weight hog exports to the United States averaged 24,218 head per week over the six weeks ending February 21, 2009, down 69.8 per cent or 56,064 head per week from 80,282 head per week over the six weeks ending February 16, 2008. Canadian live hog exports have declined significantly after peaking late in 2007 and early 2008.

Combined weekly Canadian hog slaughter and total live hog exports to the United States over the six-week period ending February 21, 2008, averaged 553,485 head per week, down 18.0 per cent from 675,235 head per week over the six weeks ending

February 16, 2008. The weekly declines are an indication of a contracting Canadian hog industry. Part of the decline may also be attributed to more Canadian weanling/feeder pigs kept home to be finished and slaughtered.  The big question is how many? Depending on the data selection used for estimates, Canadian market numbers in 2009 could be down between eight and 12 per cent.

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

The pork cutout value (185 lb.) in the United States ended the week of February 28, 2009, averaging $56.31 per cwt., down $1.30 per cwt. or 2.3 per cent from $57.61 per cwt. the previous week, and down $4.14 per cwt. or 6.9 per cent from $60.45 per cwt. a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $40.71 per cwt., up $0.21 per cwt. or 0.5 per cent from $40.50 per cwt. the previous week, but down $6.95 per cwt. or 14.6 per cent from $47.66 per cwt. a year ago. Loins (51 to 52 per cent lean) averaged $71.36 per cwt., down $2.45 per cwt. or 3.3 per cent from $73.81 per cwt. the previous week, and down $4.07 per cwt. or 5.4 per cent from $75.43 per cwt. a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $71.36 per cwt., down $0.96 per cwt. or 1.3 per cent from $72.32 per cwt. the previous week, and down $5.95 per cwt. or 7.7 per cent from $77.31 per cwt. a year ago.
(Table #2)

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 595.2 million pounds on January 31, 2009, up 7.1 per cent from 555.6 million pounds on December 31, 2008, and up 3.5 per cent from 574.9 million pounds on January 31, 2008.  Most pork stocks have increased since December, with the most significant increases occurring in bellies and loins. Butts are the only pork stocks that have decreased since December.

The United States' beef stocks in cold storage totaled 454.7 million pounds on January 31, 2009, down 7.7 per cent from 492.6 million pounds on December 31, 2008, but up 0.9 per cent from 450.8 million pounds on January 31, 2008.

The United States' poultry stocks in cold storage totaled 1,144.9 million pounds on January 31, 2009, down 1.6 per cent from 1,163.6 million pounds on December 31, 2008, but up 3.6 per cent from 1,105.7 million pounds on January 31, 2008. 

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 2.195 billion pounds on January 31, 2009, down 0.8 per cent from 2.112 billion pounds on December 31, 2008, but up 3.0 per cent from 2.131 billion pounds on January 31, 2008. (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 fluctuated between 15 and 20 per cent over the last two weeks. Prices have started to rebound over the last week after declining from the previous week. Pork cutout values overall have declined slightly over the last two weeks, with hams continuing to be one of the weaker cutouts. Pork in cold storage has increased 7.1 per cent from December to January, and is 3.5 per cent higher than a year ago. Total meat in U.S. cold storage has decreased by almost one per cent from December to January, but total meat supplies are 63-million pounds or 3.0 per cent higher than a year ago. Total meat supplies in the United States have started to decline. United States weekly hog slaughter numbers over the last four weeks were up slightly at 0.3 per cent, while slaughter numbers over the last eight weeks were down 1.2 per cent from the same period a year ago.

The lean hog futures contracts have trended lower over the last few weeks as pork in cold storage has increased, while weekly U.S. hog slaughter numbers and pork cutout values have not changed significantly. Nearby lean hog futures prices, particularly May to July, have declined by US$4-$5 per cwt. from mid February prices. (Table #4)

Table 3: United States Lean Hog Futures

Source: Chicago Mercantile Exchange

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 $150 to $160 per ckg., and even potentially into the low $160's per ckg., for the second quarter of 2009.  Prices for the third quarter of 2009 could also average in the $150 to $160 per ckg. range.  While future prices have declined from a month ago, the decline in the value of the Canadian dollar has helped Canadian hog prices. Canadian slaughter weight 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. Any major swings in the Canadian dollar over the coming months may change Canadian hog prices substantially.

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. 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