KANSAS CITY (Dow Jones)--The pork carcass composite value, commonly known as the pork cutout, extended its gains this week and has risen $8.75 per hundred pounds, or 8.75%, in the last two weeks.

The pork markets teetered in the final full week of March and just ahead of the U.S. Department of Agriculture's quarterly hogs and pigs report. Wholesale prices for hams and loins, cuts that together make up about half of the carcass by weight, declined during the second half of March, pulling the cutout down as well. Ham processors were gearing down on production as time ran out for them to smoke more fresh hams leading up to the Easter holiday in early April. Meanwhile, retail demand for pork loins was slow at that time.

A combination of the bullish quarterly hogs and pigs data on March 26 and the timing of the report contributed to a strong rebound in pork prices since. The data showed smaller-than-expected sow-farrowing intentions and supplies of slaughter hogs for the balance of this year.

The result has been higher wholesale prices reported in nine of the last 10 days. During that period, fresh ham prices have advanced 15% and loins 16%. Shoulder butts and bellies have gained as well.

In other news this week, the John Morrell pork plant in Sioux City, Iowa, processed hogs for the final time on Thursday. The aging plant will be permanently closed on April 20, per an announcement in January by Smithfield Foods (SFD), which owns Morrell. The plant had a capacity to processed around 14,000 head a day. Other packers in the western corn belt, including some Smithfield-owned facilities, will absorb the hogs that had been going to Sioux City.

The closure of the Sioux City plant comes at a time when hog supplies are undergoing a seasonal decline, and the remaining processing capacity is considered adequate to handle the expected supplies for 2010 and 2011, according to market analysts. There may be a few weeks during the late autumn and early winter when supplies could challenge the existing capacity during the week, but operating more plants on Saturday's should clean up the surplus hogs, analysts said.


This week's cattle slaughter was estimated at 616,000 head, compared with 637,000 a week ago and 599,000 year ago. Year-to-date cattle slaughter is up 1.2% from a year ago.

The week's hog slaughter estimate was 2.012 million head, compared with 2.170 million a week ago and 2.127 million a year ago. For the year, hog slaughter is off 4.5%.


The USDA estimated total beef, pork and lamb production for the week at 884.6 million pounds. Last week's output was 933.3 million pounds, and the year-ago figure was 904.7 million pounds. Year-to-date combined meat output is down 2.9%.

Broiler/fryer slaughter for the week was estimated at 160.662 million head, compared with 156.199 million a week ago and 148.483 million a year ago.

-By Curt Thacker, Dow Jones Newswires; 913-322-5178; curt.thacker@dowjones.com