The hog and pork complex has performed well in early October, but markets have recently shown growing signs of weakness. As pointed out previously, slaughter rates typically increase during late summer and autumn, although the latest totals have actually proven quite comparable to those posted the week after of Labor Day. That is, last week’s total is estimated at 2.290 million head, which topped the post-Labor Day high by just 3,000.
This may signal that the anticipated decline in year-to-year slaughter increases is ongoing. If the USDA’s September Hogs & Pigs numbers were accurate, December kills may run just 1%-3% over late-2014 rates. That might actually leave the peak weekly total for 2015 quite close to the late-2013 high at 2.365 million and below the 2.398 million figure posted in early December 2012.
The strength of fourth-quarter pork demand could prove pivotal to the price outlook. One could argue that recent signs of cash weakness reflect seasonally reduced interest from wholesalers and grocers as they look forward to the year-end holiday season. We still think lower retail prices are improving consumer offtake, but must point out that August pork exports to China were disappointing. Despite widespread talk of a turkey shortage, the ham market may disappoint as well, since stocks blasted past all former records in August and usually continue rising during September. Still, we are inclined to think the complex will hold up rather well despite these negative factors.
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.