Wholesale pork prices have been very strong for much of April leading packers to pay ever higher prices for hogs, say Steve Meyer and Len Steiner in the CME Daily Livestock Report. Current lean hog carcass prices are the highest since August 11, 2008.

Meyer and Steiner cite strong demand for many pork cuts driving average cutout value for April to $83.76 per hundredweight, 43 percent higher than April 2009 (based on a simple average of daily closing prices).

The pork loin primal value also has rebounded and at $96.60 per hundredweight it was 32.1 percent higher than in April 2009. All other primals showed significant gains over a year ago. Pork belly prices have also moved sharply higher, contributing $4.60 to the $25 overall increase in the value of the pork cutout.

“July and August hog futures are hovering above $87 per hundredweight, implying cutout values over the $90 mark,” say Meyer and Steiner. “For that to happen, we will need continued strong gains not just in the ham market, which is currently driven by robust export sales, but also in the market for pork loins.”

Adding support for pork prices is robust export demand. “We’ve seen a lot of strength coming from those export items, particularly hams,” says U.S. Meat Export Federation Economist Erin Daley. ”Prices are about double what they were a year ago so the ham cut out is nearly 80 cents per pound. Also picnics, at 68 cents per pound, are up 78 percent from last year.”

“For hams, Mexico is by far the largest market. We’ve seen exports through February, up 22 percent to Mexico,” Daley adds. “Japan remains our largest value market where loins are a big item.”

Source: CME Daily Livestock Report, USMEF