Pork cutout values have fallen sharply in mid-October. For example, after ending the week of October 10 at 122.63 cents, plant-based pork cutout was stated at just 100.54 cents/pound Thursday.
That seemingly bodes ill for the fourth-quarter outlook, since demand for most cuts is likely to remain seasonally weak. Conversely, hog slaughter is expected to surge by mid-December. Bulls may take some comfort from the fact that recent pork losses have reflected a huge drop in ham prices, since seasonal factors strongly suggest pre-holiday demand will pull that market back toward recent highs.
However, having ham prices suffer such a drop at this time is not a good sign, even if the drop proves to be temporary.
CME futures fell sharply in response to recent cash and wholesale losses, with nearby December futures dipping to 87.85 cents/pound on October 21. The weekly USDA report on Iowa-Southern Minnesota pig weights indicated that those animals added just 0.4 pounds to 284.9 pounds/head. The increase was small by most fall standards, since weights routinely surge at this time of year.
This suggests producer marketings are relatively current, which in turn may indicate the supply of market-ready swine is surprisingly tight.
Editor’s Note: Dan Vaught is a senior 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.