Hog slaughter rebounded strongly last week, with the 2.193 million-head total falling just 3.4 percent short of the year-ago result. It diverged from the relatively low totals posted during much of October and might represent the start of the big late-year surge implied by the September Hogs & Pigs report. That indicated December-February kills could fall just 1-2 percent under year-ago rates. The increased production may also bode quite ill for the winter outlook, since supplies usually reach their seasonal peak during that time. Recall that early-winter 2013-14 numbers were largely unaffected by the PEDV outbreak.
The ham market could greatly influence hog and pork prices in the short term. Ham quotes traditionally surge to an annual high around Thanksgiving as the industry builds and uses supplies during the holiday season. However, as the chart shows, having ham quotes soar far beyond former records during summer apparently strangled early-autumn buying, with recent quotes (for trimmed, selected 20-23 pound hams) diving from around 140 cents in early October to 103.66 cents/pound last week. These values are still quite high by historical standards, but a belated demand surge could pull the whole hog/pork complex higher during November. Conversely, the traditional post-peak December breakdown could undercut early-winter hog prices rather badly.
Editor’s Note: Dan Vaught is a livestock economist for Doane Advisory Services, St. Louis, Mo. Doane distributes a number of timely, relevant newsletters to farmers that contain expert commentaries and market advice. For more information, call 314.569.2700 or go to: www.Doane.com.