June 2008

This information is provided as a resource by SMA 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 since the Iowa/Minnesota price peaked at US$83.78 per cwt. on May 14, 2008. The Iowa/Minnesota carcass price on June 2 averaged US$72.36 per cwt., which is equivalent to almost C$152 per ckg. The price of Saskatchewan SPI Index 100 hogs on Monday, June 2, ranged from $125 to $135 per ckg. ($136 to $147 per ckg. for Index 109), with last week's price averaging $136.50 per ckg., down from the previous week's average of $144.10 per ckg.

United States Hog Slaughter

The number of hogs slaughtered under federal inspection in the United States for the week ending May 31, 2008, was estimated at 1.828 million head, up 6.2 per cent from 1.722 million head over the same period in 2007.  Slaughter numbers in the United States over the last eight weeks averaged an estimated 2.128 million head per week, about 9.7 per cent higher than over the same period a year ago. (Table #1) Slaughter numbers over the last four weeks averaged 2.018 million head, up 6.1 per cent from 1.902 million head over the same period a year ago. While slaughter numbers are up from a year ago, they are down from the weekly highs in April. Total pork production over the last eight weeks was estimated to average almost 431 million pounds per week, up 10.0 per cent from 392 million pounds per week over the same time period a year ago. Pork production over the last four weeks averaged 406 million pounds per week, up 6.0 per cent from 383 million pounds per week over 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 seven weeks ending May 24, 2008, averaged 405,624 head, up 1.6 per cent from 399,305 head for the seven weeks ending May 26, 2007.  In Canada, hogs slaughtered year-to-date ending May 24, 2008, totaled 8.639 million head, up slightly from 8.613 million head over the same period in 2007.

In Western Canada, federal and provincial hog slaughter numbers for the seven weeks ending May 24, 2008, averaged 155,473 head, down 3.2 per cent from 160,639 head for the seven weeks ending May 26, 2007.  In Western Canada, hogs slaughtered year-to-date ending May 24, 2008, totaled 3.249 million head, down 5.7 per cent from 3.444 million head over the same period in 2007.

Canadian Live Hog Exports

Based on USDA APHIS data, Canadian weanling and feeder hog exports to the United States averaged 138,876 head per week over the seven weeks ending May 24, 2008, up 10.6 per cent or 13,266 head per week compared to 125,611 head per week over the seven weeks ending May 26, 2007. Year-to-date ending May 24, 2008, total weanling and feeder hog exports to the United States have totaled 3.085 million head, up 20.9 per cent from 2.552 million head over the same period in 2007.

Canadian slaughter weight hog exports to the United States averaged 40,578 head per week over the seven weeks ending May 24, 2008, down 22.3 per cent or 11,669 head per week from 52,247 head per week over the seven weeks ending May 26, 2007.  Weekly slaughter hog exports since the beginning of April have declined from year ago numbers due to a combination of increased Canadian hog slaughter, particularly in Ontario, and more Canadian weanling pigs exported to the United States. Some hog producers have converted their operations from farrow-to-finish to farrow-to-wean for export to the United States.   Year-to-date ending May 24, 2008, slaughter weight hog exports to the United States have totaled 1,227,845 head, up 8.1 per cent from 1,135,674 head over the same period in 2007.  While slaughter hog exports are up year-to-date, they have been down significantly over the last two months.

Combined weekly Canadian hog slaughter and total live hog exports to the United States over the seven-week period ending May 24, 2008, averaged 585,078 head per week, up 1.4 per cent from 577,163 head per week over the seven weeks ending May 26, 2007. Year-to-date ending May 24, 2008, combined Canadian hog slaughter and total live hog exports to the United States totaled 12.952 million head, up 5.3 per cent from 12.301 million head a year ago. We have seen a large increase in weanling and feeder exports to the United States over the last several months, which have been partially caused by the liquidation of some Canadian sow herds and the restructuring of the Canadian hog feeding industry. We expect the rate of sow liquidation to increase by the end of the second quarter of 2008, particularly with the Government of Canada's Cull Breeding Swine Program.

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

The pork cutout value (185 lb.) in the United States ended the week of May 31, 2008, averaging $80.27 per cwt., down 1.0 per cent from $81.10 per cwt. the previous week, but up $4.88 per cwt. or 6.5 per cent from $75.74 per cwt. a year ago.  Hams (51 to 52 per cent lean) ended the week averaging $65.64 per cwt., up $3.35 per cwt. or 5.4 per cent from $62.29 per cwt. the previous week, and up $10.68 per cwt. or 19.4 per cent from $54.96 per cwt. a year ago. Loins (51 to 52 per cent lean) averaged $102.84 per cwt., down $4.69 per cwt. or 4.4 per cent from $107.53 per cwt. the previous week, but up $6.75 per cwt. or 7.0 per cent from $96.09 per cwt. a year ago.  Bellies (51 to 52 per cent lean) closed the week averaging $90.86 per cwt., down $1.02 per cwt. or 1.1 per cent from $91.88 per cwt. the previous week, and down $16.20 per cwt. or 15.1 per cent from $107.06 per cwt. a year ago. Cutouts for the week were all down except for hams. Overall, pork cutouts have increased significantly in May from April.  (Table #2)
(Source: Livestock Marketing Information Center)

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 652.2 million pounds on April 30, 2008, down slightly from 652.7 million pounds on March 31, 2008, but up 23.4 per cent from 528.5 million pounds on April 30, 2007.  Most pork stocks have been relatively flat since March, except for a large increase in hams (+22.3%) and a decrease in ribs (-13.9%) and trimmings (-17.6%). Year-over-year, bellies in cold storage are up 62.4 per cent, hams are up 38.5 per cent and butts are up 157.9 per cent.

The United States' beef stocks in cold storage totaled 429.3 million pounds on April 30, 2008, up 1.4 per cent from 423.2 million pounds on March 31, 2008, and up 2.9 per cent from 417.3 million pounds on April 30, 2007.

The United States' poultry stocks in cold storage totaled 1,249.5 million pounds on April 30, 2008, up 4.4 per cent from 1,197.1 million pounds on March 31, 2008, and up 28.4 per cent from 972.9 million pounds on April 30, 2007.  

Total United States' pork, beef, chicken, turkey and duck stocks in cold storage totaled 2.331 billion pounds on April 30, 2008, up 2.6 per cent from March 31, 2008, and up 21.5 per cent from April 30, 2007. (Table #3) Turkey had the largest volume increase since March 31, 2008.

Table 3: United States Stocks in Cold Storage (Frozen)

Source: NASS

Market Overview and Prices

North American cash hog prices (Iowa/Minn.) have declined over the last two weeks after peaking in mid-May. While weekly hog slaughter numbers and pork production have declined from April highs, they continue to be higher than year ago numbers. Weekly U.S. hog slaughter numbers have averaged 2.018 million head per week over the last four weeks, up 6.9 per cent from the same period a year ago. Pork in cold storage continues to be high but relatively flat from the previous month, even with the increases in pork production in April. However, total meat in U.S. cold storage continues to increase and remains at the record high of 2.331 billion pounds that was reached on April 30, 2008, up 21.5 per cent from a year ago.  While global pork demand remains strong, the high volume of meat in cold storage will be negative for pork prices.   

The nearby lean hog futures contracts have declined over the last couple of days.  Continued higher pork production than year ago numbers and high total meat in cold storage have kept futures prices at bay. (Table #4)

Table 4: 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 $133 to $138 per ckg. for the remainder of the second quarter of 2008, average between $130 to $135 per ckg. for the third quarter of 2008, and average between $125 to $130 per ckg. for the fourth quarter of 2008.

The rate of North American sow liquidation and reduced pork production will be important in stimulating higher pork prices in 2008. The next USDA and Statistics Canada reports will be important in determining the amount of liquidation in North America and pork production in the coming months. We expect the commodity markets will continue to be volatile over the coming months, reflecting changes in supply and demand estimates as sow liquidation continues. We expect changes in U.S. weekly hog slaughter numbers will continue to be important in determining market direction and pricing. Global pork exports, particularly to China, and local consumer demand for pork will also continue to be key factors influencing hog prices in 2008.

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