February 4, 2010

This information is provided as a resource by Saskatchewan Agriculture staff

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.) had improved throughout most of January, peaking on January 20, but have currently declined to late December levels. Average daily Iowa prices in January ranged between US$62.75 and $69.68 per cwt. The Iowa/Minnesota carcass price on Thursday, February 4, averaged US$63.30 per cwt, which is equivalent to just over CDN$140 per ckg. The price of Saskatchewan SPI Index 100 hogs on February 4, ranged from $120 to $130 per ckg, with last week's weekly pool price being $126.90 per ckg.

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the U.S. for the week ending January 30, 2010, was estimated at 2.142 million head, down 4.8 per cent from 2.250 million head over the same period a year ago.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.091 million head per week, down 4.6 per cent from 2.191 million head over the same period a year ago (Table#1).

Table 1: United States Weekly Hog Slaughter

Source: USDA, LMIC

U.S. pork production over the last eight weeks averaged an estimated 423 million lb. per week, down 5.1 per cent from 446 million lb. the same period a year ago, while pork production over the last six weeks averaged almost 409 million lb., down about 6.2 per cent from about 436 million lb. the same period a year ago.

Canadian Hog Slaughter

In Canada, federal and provincial hog slaughter numbers over the four weeks ending January 23, 2010, averaged 412,970 head, down 1.7 per cent from 420,012 head for the four weeks ending January 24, 2009. Canadian hog slaughter in 2009 was estimated at 21.624 million head, up about half a per cent from 21.521 million head in 2008.

In Western Canada, federal and provincial hog slaughter numbers for the four weeks ending January 23, 2010, averaged 163,445 head, up 0.3 per cent from 162,907 head for the four weeks ending January 24, 2009.  Western Canadian hog slaughter in 2009 was estimated at 8.381 million head, up 3.7 per cent from 8.082 million head in 2008.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 91,730 head per week over the six weeks ending January 23, 2010, down 7.3 per cent or 7,220 head compared to 98,949 head per week over the six weeks ending January 24, 2009.  Based on preliminary estimates, Canadian weanling and feeder hog exports to the United States in 2009 were 4.995 million head, down 35.9 per cent from 6.787 million head in 2008. Total Canadian weanling and pork exports were estimated at just over 7 million head in 2008.

Canadian slaughter-weight hog exports to the U.S. averaged 22,962 head per week over the six weeks ending January 23, 2010, down 23.9 per cent from 30,172 head per week over the six weeks ending January 24, 2009. Based on preliminary estimates, Canadian slaughter-weight hog exports to the United States in 2009 were 1.175 million head, down 94.5 per cent from 2.286 million head in 2008. Total Canadian slaughter-weight hog exports in 2008 were estimated at just over 2.3 million head.

Meat In Cold Storage

The United States' pork stocks in cold storage totaled 474.8 million lb. on December 31, 2009, down 1.6 per cent from 482.8 million lb. on November 30, 2009, and down 14.5 per cent from 555.6 million lb. on December 31, 2008. 

The United States' beef stocks in cold storage totaled 429.7 million lb. on December 31, 2009, down 0.3 per cent from 430.9 million lb. on November 30, 2009, and down 12.8 per cent from 492.6 million lb. on December 31, 2008.

The United States' poultry stocks in cold storage totaled 884.9 million lb. on December 31, 2009, down 1.5 per cent from 898.3 million lb. on November 30, 2009, and down 23.9 per cent from 1,163.6 million lb. on December 31, 2008. 

United States' combined pork, beef, chicken, turkey and duck stocks in cold storage totaled 1.789 billion lb. on December 31, 2009, down 1.2 per cent from 1.812 billion lb. on November 30, 2009, and down 19.1 per cent from 2.212 billion lb. on December 31, 2008 (Table#2).  Total meat in cold storage fell below 2 billion lb. for only the second time since December 2007.

Table 2: United States Stocks in Cold Storage (Frozen)

Source: NASS

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

The pork cutout value (185 lb.) in the U.S. ended the week of January 30, 2010, averaging $71.32 per cwt, down $5.69 per cwt or 7.4 per cent from $77.01 per cwt the previous week, but up $13.83 per cwt or 24.1 per cent from $57.49 per cwt a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $63.62 per cwt, down $6.26 per cwt or 9.0 per cent from $69.88 per cwt the previous week, but up $23.97 per cwt or 60.5 per cent from $39.65 per cwt a year ago. Loins (51 to 52 per cent lean) averaged $86.57 per cwt, down $9.72 per cwt or 10.1 per cent from $96.29 per cwt the previous week, but up $10.98 per cwt or 14.5 per cent from $75.59 per cwt a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $88.84 per cwt, down $0.56 per cwt or 0.6 per cent from $89.40 per cwt the previous week, but up $15.84 per cwt or 21.7 per cent from $73.00 per cwt a year ago (Table #3). Overall, pork cutouts were down for the week.

Table 3: United States Weekly Pork Price Summary (Weekly Average)

Source: Livestock Marketing Information Center

Market Overview and Prices       

North American cash hog prices (Iowa/Minn.) had improved early in January reaching daily average prices of close to US$70 per cwt, before declining to the current US$63 per cwt, which is close to late December prices. Pork cutout values had increased to a high of US$78.63 per cwt on January 20 before declining, and is currently about US$69 per cwt. The amount of pork in U.S. cold storage has declined 8.0 per cent from October to December, and 14.5 per cent year-over-year. Pork stocks were below 500 million lb. for only the second time in almost two years. Total meat in U.S. cold storage has decreased by 14.6 per cent or over 305 million lb. from October to December, while total meat supplies were over 422 million lb. or 19.1 per cent lower than a year ago. Total meat supplies were below 2 billion lb. for only the second time in almost two years.

The nearby lean hog futures prices had increased the first half of January, peaking on January 19, before declining to below pre-January levels. The nearby months dropped by $5 per cwt or more from the price peak, with April declining almost $7 per cwt from the peak. The news of the closure of the Sioux City hog plant in April combined with weaker pork cutouts over the last two weeks were the main reasons for the drop in lean hog futures prices. On the positive side, the Canadian dollar took a tumble after peaking at close to 98 cents in mid-January and is currently under 94 cents, which could mitigate some of the future price declines for Canadian hog producers. Cash hog prices for Canadian hog producers are still expected to trend upwards into spring and summer but will continue to be affected by swings in the value of the Canadian dollar. 

Source: Chicago Mercantile Exchange

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 $135 to $140 per ckg in the second quarter of 2010, and average between $129 to $134 per ckg in the third quarter 2010.

North American pork exports need to increase and U.S. hog slaughter numbers need to continue declining to improve cash hog prices into spring. Reduced weekly U.S. hog slaughter numbers into spring and summer could be the main factor affecting hog prices.

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