November 3, 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 improved over the last three weeks but continue to be well below producers current cost of production. Average daily Iowa prices over the last three weeks ranged between US$49.80 and $53.75 per cwt. The Iowa/Minnesota carcass price on Monday, November 2, averaged US$53.75 per cwt, which is equivalent to just under CDN$120 per ckg. The decline in the Canadian dollar from about US$0.97 to US$0.93 cents over the last two weeks was positive for Canadian hog prices. The price of Saskatchewan SPI Index 100 hogs on November 2 ranged from $98 to $108 per ckg, with last week's weekly pool price being $101.20 per ckg.

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the US for the week ending October 31, 2009, was estimated at 2.294 million head, down 3.6 per cent from 2.379 million head over the same period a year ago. Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.281 million head per week, down 2.4 per cent from 2.336 million head over the same period a year ago (Table#1). Slaughter numbers over the last four weeks averaged 2.301 million head, down 2.1 per cent from 2.350 million head over the same period a year ago. While weekly slaughter numbers have increased as per seasonal trends, numbers are again below year-ago averages.

      Table 1: United States Weekly Hog Slaughter

Source: USDA, LMIC

U.S. pork production over the last eight weeks averaged an estimated 459 million lb. per week, down 1.9 per cent from the same period a year ago, while pork production over the last four weeks averaged almost 465 million lb., down about 1.8 per cent from the same period a year ago.

Canadian Hog Slaughter

In Canada, federal and provincial hog slaughter numbers over the seven weeks ending October 24, 2009, averaged 421,447 head, up 2.7 per cent from 410,293 head for the seven weeks ending October 18, 2008. In Canada, hogs slaughtered year-to-date ending October 24, 2009, totaled 17.454 million head, up 2.7 per cent from the same period in 2008.

In Western Canada, federal and provincial hog slaughter numbers for the seven weeks ending October 24, 2009, averaged 166,954 head, up 9.6 per cent from 152,331 head for the seven weeks ending October 18, 2008. In Western Canada, hogs slaughtered year-to-date ending October 24, 2009, totaled 6.742 million head, up 6.2 per cent from 6.349 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 92,648 head per week over the six weeks ending October 17, 2009, down 22.2 per cent compared to 119,083 head per week over the six weeks ending October 11, 2008. Year-to-date, weanling and feeder hog exports in 2009 totaled 4.049 million head, down 26.3 per cent or 1.446 million head from the same period in 2008. Weanling and feeder hog export numbers have declined significantly from their peak in early 2008 when they were ranging from 150,000 to 160,000 hogs per week.

Canadian slaughter-weight hog exports to the U.S. averaged 21,386 head per week over the six weeks ending October 17, 2009, down 41.0 per cent from 36,250 head per week over the six weeks ending October 11, 2008. Year-to-date, slaughter hog exports in 2009 have totaled 937,774 head, down 51.7 per cent or 1,005,167 head from 2008. Slaughter hog export numbers have declined significantly since they peaked in late 2007 when they were ranging from 80,000 to 90,000 hogs per week.  

Combined weekly Canadian hog slaughter and total live hog exports to the U.S. over the six-week period ending October 17, 2009, averaged 531,465 head per week, down 7.3 per cent from 573,173 head per week over the six weeks ending October 11, 2008. The combined year-to-date totals as of October 11, 2009, were 21.995 million head, down 2.066 million head or 8.6 per cent from 24.061 million head over the same period in 2008.  This is a clear sign of continued contraction in the Canadian hog industry.

Canadian Hog Production

In Statistics Canada's October Canadian hog inventory report, total inventory of hogs in Canada for October 1, 2009, was estimated at 11.820 million head, down 7.3 per cent, or 925,000 head from 12.745 million head on October 1, 2008, and down 2.0 per cent from 12.065 million head on July 1, 2009. Total Canadian hog inventory has declined by 3.385 million head or 22.3 per cent since peaking at 15.205 million head on October 1, 2005.

The Canadian market herd inventory on October 1, 2009, was estimated at 10.467 million head, down 7.6 per cent, or 861,000 head from 11.328 million head on October 1, 2008, and down 2.1 per cent from 10.690 million head on July 1, 2009. The Canadian market herd has declined by 3.119 million head or 23.0 per cent since peaking at 13.586 million head on October 1, 2005. In Western Canada, the market herd inventory on October 1, 2009, was 4.234 million head, down 9.8 per cent from 4.695 million head on October 1, 2008, and down 3.2 per cent from 4.373 million head on July 1, 2009. 

The Canadian breeding herd, consisting of sows and bred gilts, was estimated at 1.331  million head on October 1, 2009, down 4.4 per cent from 1.391 million head on October 1, 2008, and down 1.5 per cent from 1.351 million head on July 1, 2009. In Western Canada, the breeding herd of sows and bred gilts was estimated at 582,800 head on October 1, 2009, down 6.9 per cent from 626,100 head on October 1, 2008, and down 2.4 per cent from 596,900 head on July 1, 2009. The Canadian breeding herd will continue to decline into 2010.  The Canadian breeding herd has declined by 261,400 head or 16.4 per cent since peaking at 1.592 million head on April 1, 2005.

In Saskatchewan, total hog inventory as of October 1, 2009, was estimated at 790,000 head, down 12.2 per cent from 900,000 head a year ago, and down 605,000 head or 43.4 per cent from the peak in July 2005. The sow and bred gilt inventory as of October 1, 2009, was 88,000 head, down 19.3 per cent from 109,000 head from a year ago, and down 43,200 head or 32.9 per cent from the peak in July 2005. Market inventory numbers as of October 1, 2009, were 699,200 head, down 11.2 per cent from a year ago, and down 559,500 head or 44.4 per cent from the peak in July 2005.

According to Statistics Canada data, farrowing numbers for the second and third quarters of 2009 were 735,300 head, down 7.4 per cent from second quarter 2008, and 731,600 head during the third quarter of 2009, down 5.3 per cent from the third quarter 2008. Farrowing intentions for the fourth quarter of 2009 are estimated to be 736,100 head, down 6.4 per cent, while farrowing intentions for the first quarter of 2010 are estimated to be 729,300 head, down 3.6 per cent from the first quarter 2010 (Table #2).

The total number of pigs born in Canada during the second and third quarters of 2009 was estimated at 15.839 million head, down 5.9 per cent or almost one million pigs from 16.834 million head during the second and third quarters of 2008.

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

(1) Estimated farrowing intentions
Source: Statistics Canada, October 2009

In Western Canada, farrowing numbers were 350,000 head during the second quarter of 2009 and 341,400 head during the third quarter, down 9.5 per cent and 7.2 per cent, respectively, compared to the same quarters in 2008. Farrowing intentions for the third and fourth quarters of 2009 are estimated at 341,400 head and 344,100 head, down 6.9 per cent and 1.5 per cent, respectively, from the same quarters a year ago (Table #3). The total number of pigs born in Western Canada during the second and third quarters of 2009 was 7,695,300, down 640,700 head or 7.7 per cent from 8,336,000 head born during the second and third quarters of 2008.  

Table 3: Sows Farrowing and Pigs Born, Western Canada

(1) Estimated farrowing intentions
Source: Statistics Canada, October 2009

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

The pork cutout value (185 lb.) in the US ended the week of October 31, 2009, averaging $57.16 per cwt, up $1.73 per cwt or 3.1 per cent from $55.43 per cwt the previous week, but down $6.33 per cwt or 10.0 per cent from $63.49 per cwt a year ago. Hams (51 to 52 per cent lean) ended the week averaging $54.58 per cwt, up $5.45 per cwt or 11.1

per cent from $49.13 per cwt the previous week, and up $4.40 per cwt or 8.8 per cent from $50.18 per cwt a year ago. Loins (51 to 52 per cent lean) averaged $65.70 per cwt, down $1.30 per cwt or 1.9 per cent from $67.00 per cwt the previous week, and down $20.37 per cwt or 23.7 per cent from $86.07 per cwt a year ago. Bellies (51 to 52 per cent lean) closed the week averaging $71.70 per cwt, up $4.86 per cwt or 7.3 per cent from $66.84 per cwt the previous week, and up $1.93 per cwt or 2.8 per cent from $69.77 per cwt a year ago (Table #4).

Table 4: 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 531.9 million lb. on September 30, 2009, up slightly from 530.1 million lb. on August 31, 2009, and up 1.1 per cent from 526.2 million lb. on September 30, 2008. Increases in hams, loins and ribs were almost offset by declines in bellies and butts from August storage levels. 

The United States' beef stocks in cold storage totaled 434.1 million lb. on September 30, 2009, up 3.3 per cent from 420.1 million lb. on August 31, 2009, and down 4.5 per cent from 454.5 million lb. on September 30, 2008.

The United States' poultry stocks in cold storage totaled 1,257.1 million lb. on September 30, 2009, down 3.7 per cent from 1,305.7 million lb. on August 31, 2009, and down 9.1 per cent from 1,382.4 million lb. on September 30, 2008. Chicken and turkey stocks have decreased from last year's levels and August levels, setting an overall decline. 

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 2.223 billion lb. on September 30, 2009, down 1.5 per cent from 2.256 billion lb. on August 31, 2009, and down 5.9 per cent from 2.331 billion lb. on August 31, 2008 (Table#5).

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

Source: NASS

Market Overview and Prices

North American cash hog prices (Iowa/Minn.) have improved over the last few weeks as overall pork cutout values have improved. Average pork cutout values have improved by just over $4 per cwt or 7.7 per cent over the last three weeks. However, reduced year-over-year North American pork exports continue to weigh on the market. Pork in cold storage has been relatively flat from July to September, while total meat in U.S. cold storage has decreased by 1.5 per cent or 33 million lb. from August to September. Total meat supplies are 140 million lb. or 5.9 per cent lower than a year ago. However, total meat supplies in the United States continue to be at the upper end of cold storage numbers compared to the last five years.

The nearby lean hog futures prices have improved noticeably over the last few weeks, particularly the last few days. While lean hog prices continue to be below prices earlier in the year, they are trending up. The Canadian dollar has declined by about four cents over the three weeks, which is positive for Canadian hog prices. 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 $100 to $110 per ckg for the fourth quarter of 2009, and average between $110 to $120 per ckg for the first quarter of 2010. Changes in the value of the Canadian dollar will effect prices.

Source: Chicago Mercantile Exchange

To improve hog prices, we will need increases in North American pork exports or a decrease in North American hog numbers. While the announcement last week that China would allow U.S. pork imports may help exports, we are not sure how much more pork China actually needs at this time. With North American pork exports down from year-ago numbers and not expected to significantly increase in the short term, reduced sow numbers will probably be the near-term solution.  Canadian hog production continues to fall, with total market inventory numbers and breeding inventory continuing to decline.  The Canadian Hog Farm Transition Program will start this week, and is expected to take more production out of the Canadian hog industry. However, U.S. pork production will still probably need to decline significantly before we see a rapid rebound in hog prices. At current pork production and export levels, hog prices will be relatively flat until early 2010, if there are no further demand issues.

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