August 10, 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.) have declined by over 15 per cent over the last two weeks. Continued high United States pork production, combined with weaker pork exports due to H1N1 concerns, are the main reasons for these weaker prices. The Iowa/Minnesota carcass price on Friday, August 7, averaged US$48.15 per cwt, which is equivalent to almost C$108 per ckg. The price of Saskatchewan SPI Index 100 hogs on Friday, August 7, ranged from $93 to $103 per ckg with the weekly pool price of $100.40 per ckg. Hog prices are well below producers' current production costs with Western Canadian hog producers currently losing an estimated range of $45 to $55 per slaughter weight hog sold.

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the United States for the week ending August 8, 2009, was estimated at 2.096 million head, down 1.5 per cent from 2.127 million head over the same period a year ago.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.016 million head per week, down 2.7 per cent from 2.072 million head over the same period a year ago. (Table #1) Slaughter numbers over the last four weeks averaged 2.047 million head, down 3.5 per cent from 2.122 million head over the same period a year ago.

Table 1: United States Weekly Hog Slaughter

Source: USDA, LMIC

While last week's U.S. hog slaughter numbers were down compared to year-ago numbers, increased hog weights actually increased U.S. pork production up 1.5 per cent from a year ago and by 2.3 per cent over the last two weeks. Pork production in the United States over the last eight weeks averaged an estimated 405 million pounds per week, down slightly from the same period a year ago, while pork production over the last four weeks averaged about 409 million pounds, down about 1.2 per cent from the same period a year ago. While U.S. hog slaughter numbers have declined from year-ago numbers, increased hog weights have kept pork production over the last two months constant from the same period in 2008.

Canadian Hog Slaughter

In Canada, federal and provincial hog slaughter numbers over the seven weeks ending August 1, 2009, averaged 403,954 head, up 4.3 per cent from 387,430 head for the seven weeks ending July 26, 2008. In Canada, hogs slaughtered year-to-date ending August 1, 2009, totaled 12.396 million head, up 2.2 per cent from the same period in 2008.

In Western Canada, federal and provincial hog slaughter numbers for the seven weeks ending August 1, 2009, averaged 161,284 head, up 10.6 per cent from 145,777 head for the seven weeks ending July 26, 2008.  In Western Canada, hogs slaughtered year-to-date ending August 1, 2009, totaled 4.753 million head, up 4.4 per cent from 4.551 million head over the same period in 2008.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 99,218 head per week over the six weeks ending July 25, 2009, down 6.4 per cent compared to 106,003 head per week over the six weeks ending July 19, 2008.  Weanling/feeder hog export numbers have declined significantly after peaking early in 2008 at 150,000 to 160,000 hogs per week.

Canadian slaughter weight hog exports to the United States averaged 26,183 head per week over the six weeks ending July 25, 2009, down 22.2 per cent from 33,637 head per week over the six weeks ending July 19, 2008. Slaughter hog export numbers have declined significantly after peaking at 80,000 to 90,000 hogs per week late in 2007.  

Combined weekly Canadian hog slaughter and total live hog exports to the United States over the six-week period ending July 25, 2009, averaged 526,163 head per week, up 0.5 per cent from 523,396 head per week over the six weeks ending July 19, 2008. The combined year-to-date totals as of July 25, 2009, were 15.603 million head, down 1.631 million head from 17.234 million head in 2008.  

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

The pork cutout value (185 lb.) in the United States ended the week of August 8, 2009, averaging $56.62 per cwt, down $4.23 per cwt or 6.9 per cent from $60.85 per cwt the previous week, and down $33.94 per cwt or 37.5 per cent from $90.56 per cwt a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $40.07 per cwt, down $5.37 per cwt or 11.8 per cent from $45.44 per cwt the previous week, and down $48.49 per cwt or 54.8 per cent from $88.56 per cwt a year ago. Loins (51 to 52 per cent lean) averaged $73.05 per cwt, down $5.87 per cwt or 7.4 per cent from $78.92 per cwt the previous week, and down $35.15 per cwt or 32.5 per cent from $108.20 per cwt a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $75.56 per cwt, down $8.95 per cwt or 10.6 per cent from $84.51 per cwt the previous week, and down $24.09 per cwt or 24.2 per cent from $99.65 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 578.8 million lb. on June 30, 2009, down one per cent from 584.5 million pounds on May 31, 2009, but up 9.2 per cent from 530.1 million lb. on June 30, 2008.  Pork stocks overall have declined since May, with small declines in bellies, loins and butts and a large decline in ribs (-18 per cent). Hams were the only stock with a large increase (+23 per cent).

The United States' beef stocks in cold storage totaled 434.6 million lb. on June 30, 2009, up 4.0 per cent from 417.9 million lb. on May 31, 2009, and up 1.5 per cent from 428.1 million lb. on June 30, 2008.

The United States' poultry stocks in cold storage totaled 1,260.0 million lb. on June 30, 2009, up 2.2 per cent from 1,232.6 million lb. on May 31, 2009, but down 5.5 per cent from 1,333.1 million lb. on June 30, 2008.

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 2.273 billion lb. on June 30, 2009, up 1.7 per cent from 2.235 billion lb. on May 31, 2009, but down 0.8 per cent from 2.291 billion lb. on June 30, 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 trended lower last week with U.S. hog slaughter numbers leveling off over the last two weeks while pork production increased due to heavier hogs going to market. Pork cutout values declined last week and are well below year-ago prices of just above US$90 per cwt.  Reduced pork demand in the United States, particularly reduced export demand, has weighed heavily on the market.  Pork in cold storage has decreased by one per cent from May to June, but is 9.2 per cent higher than a year ago. Total meat in U.S. cold storage has increased by 1.7 per cent or 38 million lb. from May to June, while total meat supplies are 18 million lb., or 0.8 per cent lower than a year ago. Total meat supplies in the United States continue to be at the upper end of cold storage numbers compared to the last five years.

Source: Chicago Mercantile Exchange

The lean hog futures prices have declined significantly over the last two weeks as the result of higher pork production and fears that, with fall approaching, H1N1 could significantly increase, further hurting North American pork exports. The lean hog futures market may be oversold with the significant decline in recent weeks. Based on the current lean hog futures prices and the Canadian exchange rate futures, the futures market is indicating that Saskatchewan Index 100 hogs could average between $80 to $90 per ckg. for the fourth quarter of 2009, and average between $90 to $100 per ckg. for the first quarter of 2010. Significant herd liquidation will occur at these prices. As in 2008, a surge in North American pork exports is needed to improve hog prices this fall!

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