October’s Rollercoaster Ride
Feed costs rose and hog prices fell quickly during October. The combination caused hog profits to turn negative for the first time since March. There were several reasons for the rapid drop in hog prices.
September grocery store pork prices were record high, which slowed retail pork movement. Meanwhile, the amount of pork on the market increased fast as both hog weights and daily slaughter increased. Cool fall weather, new-crop corn and ever better genetics combined to push slaughter weights up. The average weight of barrows and gilts marketed in Iowa and Minnesota reached a record 274 pounds in mid-October.
Getting Marketings in Line
Another potential cause for the jump in market-hog weights during October was that producers may have fallen behind. Hog slaughter during August and September was consistently below the level forecast by USDA’s Hogs & Pigs Report. Barrow and gilt slaughter during the first half of October was nearly 2 percent higher than expected.
While it’s true that daily hog slaughter picks up as we move into fall, this year it climbed faster than normal. Perhaps weather caused both the shortfall in August and September slaughter and the October surge. USDA is predicting that hog slaughter will move steadily closer to year-ago levels as we head toward spring.
Exports Projected Higher in 2011
Near-record wholesale pork prices this summer appear to have slowed pork exports and given a slight boost to pork imports. U.S. pork exports trended steadily higher until 2008. Sales have dropped back a bit from the mid-2008 peak when China was buying huge quantities of U.S. pork. Monthly pork exports now seem to be tracking in a range between 300 million and 400 million pounds.
Pork imports have been running below 100 million pounds for 72 consecutive months. During that time, August 2009 pork imports made a jump and ranked the highest since October 2007. Lower pork prices this fall should push both exports and imports in the desired directions. Looking ahead to 2011, USDA is forecasting a 1.5 percent increase in U.S. pork exports.