Hog slaughter final week was lower than anticipated, partially as a result of warmth and massive slaughter earlier than Labor Day resulted in tight spot hog provide. Slaughter could stay beneath yr in the past ranges subsequent week however finally it’s anticipated to leap over 2.5m head later within the month and into October.
Highlights
- Hog slaughter final week was lower than anticipated, partially as a result of warmth and massive slaughter earlier than Labor Day resulted in tight spot hog provide. Slaughter could stay beneath yr in the past ranges subsequent week however finally it’s anticipated to leap over 2.5m head later within the month and into October.
- Stomach costs stay below stress and are anticipated to float decrease within the subsequent couple of months. Retail options that drove gross sales in July and August have ended, simply as pork provide is anticipated to seasonally improve.
- Picnics have been regular within the close to time period however strong export demand is anticipated to underpin costs in This fall.
- Pork loins proceed to learn from the excessive value of competing merchandise, be this rooster breasts or floor beef. This could underpin costs within the close to time period, however ample provide and seasonal demand will current extra headwinds in This fall.
- Pork exports had been seasonally decrease in July, a operate of decrease manufacturing and restricted freezer provides. Excellent pork export gross sales are +40% above yr in the past ranges, implying a notable improve in exports within the fall as slaughter picks up.
Full Report
Pork Markets Have been Effectively Supported Final Week however Will Face Extra Headwinds as Provide Seasonally Strikes Greater and Demand Uncertainty Persists.
Final week’s hog slaughter totaled 2.234 million head, which was about 40,000 fewer than our preliminary expectations. This decline in slaughter is just not surprising, as Labor Day falls on the similar time yearly, so it shouldn’t come as a shock to business operators. Moreover, there have been some points with product shelf life affecting order move. Some finish customers diminished their orders main as much as the lengthy weekend however the expectation is they are going to improve them afterward. This case creates short-term volatility within the product market.
On Friday, the pork cutout value reached $4.1 per hundredweight (cwt), representing a 4% improve in comparison with the earlier week. Essentially the most vital good points had been seen in bellies, which rose by $11/cwt (10%), adopted by hams, up $3.9/cwt (4%), and ribs, up $4.6/cwt (4%). This improve is because of processed gadgets seeing essentially the most vital good points as processing crops resumed manufacturing to cowl wants in a thinly traded market. The true take a look at for the hog market and product costs will probably happen within the second half of the month when slaughter returns to full manufacturing. Final yr, hog slaughter in the course of the three weeks following Labor Day week averaged 2.509 million head.
Not too long ago, hog slaughter has been about 1.5% larger than the earlier yr. Assuming a extra conservative 1% improve, we will anticipate weekly slaughter within the subsequent three weeks to succeed in 2.53 million head per week. As proven within the chart on the proper, we haven’t seen this degree of slaughter since final winter. The year-over-year improve in slaughter has been offset to this point by decrease hog carcass weights, which averaged 1.9% beneath the earlier yr for all barrows/gilts coming to market within the 5 days ending September 7. Though scorching temperatures within the Midwest contributed to decrease weights, weights are anticipated to extend as cooler temperatures arrive and recent corn is integrated into day by day rations.
Cutout futures presently point out a comparatively orderly decline into the autumn, aligning with the seasonal pattern of current years. On a optimistic be aware, pork stays competitively priced at each retail and foodservice ranges in comparison with beef and even rooster. Boneless rooster breasts and boneless pork loin presently on the similar value versus $320 for 85CL floor beef. Ham costs and picnics have benefited from robust export demand. The decline in stomach costs is mirrored in decrease Oct/Dec futures. Nevertheless, a problem that’s more durable to quantify is the affect of diminished gross sales to California and Massachusetts. These could turn out to be extra regarding as we method October and the winter months.
Pork Exports Seasonally Decline in July however Are Anticipated to Rebound within the Fall
Pork exports in July had been about 5% larger than final yr however decrease than earlier within the yr as a result of restricted provide and excessive costs. The California resolution on Prop 12 eligible product additional restricted exports, encouraging suppliers to carry on to frozen stock. Regardless of this, complete pork shipments in July elevated by 5%, with Mexico being the highest market, accounting for practically 40% of all shipments. 12 months-to-date pork export shipments had been 9.5% larger than final yr, in line with the USDA forecast for 2023. August shipments are anticipated to be 10-12% larger YoY, with pork selection meat exports rising by 7% regardless of a 6% decline to China.
Value Chart
Forecasts
Steiner Consulting Group produces the Nationwide Pork Board e-newsletter primarily based on info we consider is correct and dependable. Nevertheless neither NPB nor Steiner and Firm warrants or ensures the accuracy of or accepts any legal responsibility for the information, opinions or suggestions expressed.
