January 2008

This information is provided as a resource by SAF 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 dropped over the last few weeks, reversing an upward trend that began in December, and averaged

US $54.92 on December 12. The Iowa/Minnesota carcass price on January 8 averaged US $46.06 per cwt., which is equivalent to just under $97 per ckg. (Cdn. $). The price of Saskatchewan SPI Index 100 hogs on Tuesday, January 8, ranged from $83 to $93 per ckg. ($90 to $101 per ckg. for Index 109), with last week's price averaging $88.60 per ckg., down from the previous week's average of $91.00 per ckg. Reduced hog slaughter days over the last two weeks due to the Christmas and New Year's holidays contributed to the downward pressure on hog prices.

United States Hog Production

The USDA's December 27, 2007, Quarterly Hogs and Pigs Report indicated that the total United States inventory of hogs and pigs on December 1, 2007, was 65.110 million head, down 0.7 per cent from 65.589 million head on September 1, 2007, but up 4.2 per cent from 62.490 million head on December 1, 2006. The June and September 2007 hog numbers were revised upward (1.7 and 1.5 per cent) from the September 2007 report.

The market hog inventory on December 1, 2007, was 58.953 million head, down 0.8 per cent from 59.444 million head on September 1, 2007, but up 4.5 per cent from 56.402 million head on December 1, 2006. The June 1, 2007, hog market inventory numbers were revised upward by 1,051,000 head, and the September 1, 2007, hog market inventory numbers were revised upward by 941,000 head from the September 2007 Hogs and Pigs Report.  

The total breeding inventory in the United States on December 1, 2007, was 6.157 million head, up about 0.2 per cent from 6.144 million head on September 1, 2007, and up 1.1 per cent from 6.087 million head on December 1, 2006.

Overall, the USDA's December Hogs and Pigs inventory report was a little more bearish than the average trade estimates, with the total herd up 4.2 per cent from a year ago, (compared to trade estimates of 3.4 per cent), with the primary difference in the market herd, which was up 4.5 per cent compared to the trade estimate of 3.5 per cent.

The September to November 2007 U.S. pig crop was 27.998 million head, up 1,141,000 head or 4.2 per cent from the same period in 2006, and up 6.9 per cent from the same period in 2005. (Table#1) The June to August 2007 pig crop numbers were revised upward by 194,000 head to 27.646 million head, while the March to May 2007 pig crop numbers were revised upward by 755,000 head, from the September 2007 Hogs and Pigs Report. The U.S. pig crop over the last four quarters is up 4.3 million head or 4.1 per cent from the same four quarters a year ago.

Table 1: United States Quarterly Pig Crop

(1) December preceding year
Source: USDA Hogs and Pigs Report, December 2007

The number of sows farrowing during September to November 2007 was 3.029 million, up 2.7 per cent from 2.949 million head during September to November 2006, and up 4.4 per cent from 2.900 million head during September to November 2005. (Table#2) The June to August 2007 farrowing numbers were revised upward by about 0.2 per cent, while the March to May 2007 farrowing numbers were revised upward by 67,000 head or 2.3 per cent from the September 2007 Hogs and Pigs Report.  Actual farrowing numbers for the four quarters ending November 2007 were up over 2.8 per cent from the same period a year ago.

Table 2: United States Quarterly Sows Farrowing, and Intentions

 (1) December preceding year.
 (2) Farrowing Intentions.
Source: USDA Hogs and Pigs Report, December 2007

Farrowing intentions for the December to February 2008 period have been revised upward by 1.1 per cent from the September report (2.943 million head), and are now estimated at 2.976 million head, up 2.4 per cent from 2.905 million head over the same period in 2006. Farrowing intentions for the March to May 2008 period are estimated at 3.037 million head, up slightly from 3.033 million head over the same period a year ago.  

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the United States for the week ending January 5, 2008, was estimated at 2.009 million head, up 8.9 per cent from 1.845 million head over the same period in 2007.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.220 million head per week, about 8.1 per cent higher than over the same period a year ago. (Table#3) Total pork production over the last eight weeks was estimated to average just over 468 million pounds per week, up 9.8 per cent from 427 million pounds per week over the same time period in 2006.

Table 3: United States Weekly Hog Slaughter

Source: USDA

Canadian Hog Slaughter

In Canada, federal and provincial hog slaughter numbers over the seven weeks ending December 29, 2007, averaged 402,353 head, down 0.5 per cent from 404,380 head for the seven weeks ending December 30, 2006.  In Canada, hogs slaughtered year-to-date ending December 29, 2007, totaled 21.085 million head, down 2.5 per cent from 21.619 million head over the same period in 2006.

In Western Canada, federal and provincial hog slaughter numbers for the seven weeks ending December 29, 2007, averaged 147,525 head, down 7.5 per cent from 159,567 head for the seven weeks ending December 30, 2006.  In Western Canada, hogs slaughtered year-to-date ending December 29, 2007, totaled 8.172 million head, down 7.8 per cent from 8.868 million head over the same period in 2006. With the fall push for double-shifting at the Brandon plant and the closure of the Schneider's plant in Winnipeg, Maple Leaf's slaughter numbers in Brandon have exceeded the combined plants' total before the changes. As the Brandon plant continues to expand its double shift, slaughter numbers should continue to increase and narrow the gap from last year.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 142,496 head per week over the seven weeks ending December 29, 2007, up 22.8 per cent or 26,496 head per week compared to 116,000 head per week over the seven weeks ending December 30, 2006. Year-to-date ending December 29, 2007, total weanling and feeder hog exports to the United States have totaled 6.473 million head, up 10.1 per cent from 5.879 million head over the same period in 2006.   

Canadian slaughter weight hog exports to the United States averaged 80,119 head per week over the seven weeks ending December 29, 2007, up 31.7 per cent or 19,302 head per week from 60,817 head per week over the seven weeks ending December 30, 2006.  Year-to-date ending December 29, 2007, total slaughter weight hog exports to the United States have totaled 3.232 million head, up 17.3 per cent from 2.756 million head over the same period in 2006.  

Combined weekly Canadian hog slaughter and total live hog exports to the United States over the seven-week period ending December 29, 2007, averaged 624,968 head per week, up 7.5 per cent from 581,197 head per week over the seven weeks ending December 30, 2006. Year-to-date ending December 29, 2007, combined Canadian hog slaughter and total live hog exports to the United States totaled 30.790 million head, up 1.7 per cent from 30.254 million head a year ago. The recent increase in hog flow

(7.5 per cent over last seven weeks compared to same period a year ago) and slaughter weight exports to the United States was partially caused by the liquidation of some Canadian sow herds. Large losses are forcing many producers to close their operations.

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

The pork cutout value (185 lb.) in the United States ended the week of January 5, 2008, averaging $56.88 per cwt., down $1.60 cwt. or 2.7 per cent from $58.48 per cwt. the previous week, and down $6.40 per cwt. or 10.1 per cent from $63.28 per cwt. a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $38.27, down $2.19 per cwt. or 5.4 per cent from $40.46 per cwt. the previous week, and down $12.45 per cwt. or 24.5 per cent from $50.72 per cwt. a year ago. Loins (51 to 52 per cent lean) averaged $74.50 per cwt., down $1.04 per cwt. or 1.4 per cent from $75.54 per cwt. the previous week, and down $5.05 per cwt. or 6.3 per cent from $79.55 per cwt. a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $72.25 per cwt., down $1.42 per cwt. or 1.9 per cent from $73.67 per cwt. the previous week, and down $6.85 per cwt. or 8.7 per cent from $79.10 per cwt. a year ago. Cutouts for the week were all lower. (Table#4)

(Source: Livestock Marketing Information Center)

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 477.4 million pounds on

November 30, 2007, down 3.5 per cent from 494.7 million pounds on October 31, 2007, but up 1.9 per cent from 468.5 million pounds on November 30, 2006.  Stocks of bellies, loins, ribs and butts have increased from October, while hams decreased. Year-over-year, hams in cold storage are up 19.5 per cent and bellies are up 13.0 per cent, while ribs are down 23.7 per cent.

The United States' beef stocks in cold storage totaled 470.3 million pounds on

November 30, 2007, down 3.3 per cent from 486.6 million pounds on October 31, 2007, and down 9.6 per cent from 520.3 million pounds on November 30, 2006.

The United States' poultry stocks in cold storage totaled 919.2 million pounds on

November 30, 2007, down 15.6 per cent from 1,088.9 million pounds on October 31, 2007, but up 0.8 per cent from 911.9 million pounds on November 30, 2006.  

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 1.867 billion pounds on November 30, 2007, down 9.8 per cent from October 2007, and down almost 1.8 per cent from November 2006. (Table #5)

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

Source: NASS

Market Overview and Prices       

North American cash hog prices (Iowa/Minn.) trended lower over the last few weeks after starting to rebound in early December. Pork in cold storage had decreased from October to November, but was 1.6 per cent higher than November 2006.  Weekly U.S. hog slaughter numbers continue to average over 2.2 million head per week over the last eight weeks. The December USDA Quarterly Hog and Pigs Report was bearish with upward revisions on market herd inventory, March to May and June to August pig crops, and farrowing intentions for the next two quarters.

In their December Quarterly Hogs and Pigs Report Summary, Glenn Grimes and Ron Plain of the University of Missouri commented that, from January to November 2007, the U.S. live hog demand index was up 3.2 per cent, while U.S. consumer demand for pork was up 2.3 per cent over the same period a year ago.  U.S. pork exports from January to October 2007 were up about 2.9 per cent from a year ago.  Grimes and Plain expect November and December pork exports to exceed year ago levels. They expect a surge in U.S. pork exports during the fall with shipments to China should help make 2007 the 16^th consecutive year of record U.S. pork exports. (Source: Grimes and Plain)

With the upward revisions in the USDA Quarterly Hogs and Pigs Report, Grimes and Plain have adjusted their commercial hog slaughter numbers up 285,000 head for the first quarter of 2008 to 27.935 million head, and revised second quarter 2008 hog slaughter numbers up 825,000 head to 26.825 million head, and third quarter 2008 hog slaughter numbers up 800,000 head to 28.000 million head from their earlier estimates in October.  (Table #6) Overall, they increased slaughter number estimates for the first three quarters of 2008 by 1.9 million head or 2.4 per cent from earlier estimates. Slaughter numbers are now expected to increase by 4.1 per cent in 2008 from 2007, almost the same increase as from 2006 to 2007. Grimes and Plain estimate that the U.S. will again have record slaughter numbers in 2008, with record numbers in the fourth quarter of 2008 causing prices to drop to the $30-per-cwt. range in the fourth quarter. (Source: Grimes and Plain)

Table 6: United States Estimated Commercial Hog Slaughter  and Live Hog Prices, By Quarter

(p) Projections, (pe) Partial Estimate
Source: Glenn Grimes and Ron Plain,
University of Missouri - Columbia (December 27, 2007)

The lean hog futures market has been trending lower since early December.  The December USDA Quarterly Hogs and Pigs report was bearish and had revised U.S. inventory and production numbers up. New anticipation of increased slaughter numbers in 2008 has put some downward pressure on hog futures over the last two weeks. The nearby markets (Feb/April/May) have taken a significant fall since mid-December.

(Table #7)

Table 7: United States Lean Hog Futures

Source: Chicago Mercantile Exchange         

Based on current lean hog future prices and current U.S. hog slaughter numbers, Saskatchewan 100 Index hogs are estimated to average between $90 to $100 per ckg. for first quarter of 2008, and increase in the second quarter of 2008 to average between $115 to $125 per ckg. We expect the commodity markets will continue to be volatile over the coming months, reflecting changes in supply and demand estimates. Changes in U.S. weekly hog slaughter numbers will be important in determining market direction and pricing. Changes in the value of the Canadian dollar will continue to be a key factor determining where Canadian hog prices go in 2008. Global pork exports, local consumer demand for pork and U.S. weekly hog slaughter numbers will continue to be key factors influencing hog prices in 2008.

For more information contact the Livestock Development Branch:

Brad Marceniuk
Livestock Economist
933-5098
bmarceniuk@agr.gov.sk.ca