First-quarter U.S. pork production is expected to be 5.92 billion pounds, 9.6 percent above the same period last year, predicts the USDA in its March 2008: Livestock, Dairy and Poultry Outlook Report. Total commercial pork production in 2008 is expected to be 23.1 billion pounds, 5.4 percent above 2007.

First-quarter prices for live equivalent 51-52 percent live hogs are expected to range between $40 and $41 per hundredweight, 12 percent below the same period a year ago. As a result, many U.S. hog producers are operating at losses of around $30 per hog.

High feed costs have recently focused attention on year-over-year changes in U.S. sow slaughter. Through March 1, 2008, weekly U.S. federally inspected sow slaughter has increased moderately—4.2 percent over the same period last year. This slaughter number includes sows imported from Canada. For the first 2 months of 2008, Iowa/Minnesota negotiated prices for 300-449 pound sows averaged $23.70, almost 31 percent below the same period in 2007.

Meanwhile, continued buildup of cold stocks may signal a slowdown in pork demand. Beginning cold stocks of frozen pork in February increased significantly above recent stocks levels. Stocks of frozen pork on January 31, 2008 were 563.6 million pounds, 16 percent above year-earlier levels. Larger-than-expected increases in stocks levels suggests that pork products are entering the supply chain faster than they are flowing through the chain to domestic and foreign consumers.

Increased stocks levels were most pronounced in boneless hams, bellies, and butts. While part of the increase in boneless hams is likely attributable to Easter demand, the buildup in belly stocks, which are largely consumed domestically, and in butts—a large proportion of which are exported— may signal a slowdown in pork demand.

Source: USDA