Retail pork prices gained a little ground in June, up nearly 4 cents a pound from the previous month and the first monthly gain since January. Weak domestic demand for pork continues to be a drag on pork and hog prices. For the last 12 months retail demand strength for pork has fallen by 2 percent, compared to 2.2 percent growth for beef.
With domestic demand struggling, pork export levels continue to be very important. For the first six months of the year exports are 12% above year ago levels, with exports to mainland China more than double the figure for the first six months of 2011. China remains an important but very volatile market for U.S. pork, and hog prices over the past few years have shown a strong relationship to export quantities to this market. Since January 2009, the correlation between monthly pork exports to China and the national base barrow and gilt price has been 0.63, higher than for any other export market and even higher than for total export quantities.
USDA’s decision to purchase $100 million of pork products to use for federal food assistance programs is helpful to the industry, but will not yield a large long term market effect.
The Thursday afternoon calculated pork cutout value was $90.83/cwt, down $1.97 from the previous Thursday and continuing well under the year ago level at $16.10 lower. Loins, butts and ribs were higher for the week, but picnics, hams and bellies were down, with hams losing 10.1%.
Hog prices were mostly down for the second week in a row. The national average negotiated carcass price for direct delivered hogs on the morning report today was $84.91/cwt, down $1.41 from last Friday. The eastern corn belt was up 70 cents to $84.68/cwt, but the western corn belt fell to $85.92, and Iowa-Minnesota dropped $2.77 to $85.99/cwt. Peoria had a top live price this morning of $56 and Zumbrota had a live top today of $59/cwt. The top for interior Missouri live hogs Friday was $64.50/cwt, unchanged from the previous Friday. The average hog carcass price was 93.5% of the cutout value.
Hog slaughter this week totaled 2.166 million head, up 6.6% from the week before and up 5.6% compared to the same week last year. Year to date hog slaughter is 1.4% above 2011.
The average barrow and gilt live weight in Iowa-Minnesota last week was 266 pounds, 0.3 pounds above a week earlier and up 5 pounds from a year ago. The stretch of above year-earlier weights dating back to November of 2011 continues.
Hog futures were slightly higher this week. Friday's close for the October lean hog futures contract was $76.28/cwt, up $0.75 from the previous Friday. December hogs settled at $73.70/cwt, up $0.28 for the week. February 2013 hogs ended the week at $81.20/cwt, up $0.50 from the week before.