090109 Pork, Hog Traders Disappointed With Lower Meat Price

(Dow Jones)--Pork and hog traders said they were disappointed that Wednesday's bounce in the U.S. Department of Agriculture's pork carcass composite value, or the pork cutout, wasn't the beginning of a trend.

The value rose Wednesday after dropping to its lowest level since mid-April 2003 on Tuesday, but declined again on Friday. The cutout has fallen sharply since late summer when it set a record high at $94.41 per hundredweight on Aug. 15. Tuesday's multi-year low was at $54.49.

Loins led the way Wednesday with the sharpest gains, rising $2.47 per hundredweight. Hams and ribs were next with $0.96 and $0.89 gains, respectively. Butts were $1.25 lower.

In the long decline leading up to Tuesday's lows, hams led all other cuts. During the summer, export sales of hams were strong, aided by a cheap U.S. dollar. That changed into the autumn as the dollar gained strength, while some trade issues arose with Russia and Mexico.

In mid-August, the USDA's ham primal cut value was reported at a record high $90.60, but Tuesday's quote of $34.30 represented a 62% decline in the ensuing 4 1/2 months.

Meanwhile, the beef carcass cutout value continues to weaken, indicating that recent wintry weather didn't harm the cattle as badly as many traders feared, the analysts said. At least the arctic blasts didn't make much difference to cattle that were nearly ready for slaughter, market analysts and traders in the Plains said.

Choice beef prices remain under pressure, and reports from the field indicate the packing plants are seeing an increase in the number of cattle that are carrying more fat than is desired.

That scenario at the beef plants is likely to change over time, though, market analysts, brokers and cattle feeders said. The cattle that are most vulnerable to winter storms are the younger cattle, especially those that were most recently placed into the feedlots.

That means the full effects of the latest winter storms may be felt into May or June as the youngest of the feedlot cattle come to slaughter, the analysts said.

Choice beef prices have been under year-ago price most of this month, and market analysts said it may take even lower prices to attract beef sales since pork is so cheap compared with beef.

With pork at multi-year lows, beef will be forced to move lower or get left out of the feature mix at retail grocers, market analysts said.

Cattle/Hog Slaughters

This week's cattle slaughter was estimated at 507,000 head, compared with 450,000 a week ago and 532,000 a year ago.

The week's hog slaughter estimate was 1.918 million head, compared with 1.745 million a week ago and 1.996 million a year ago.

Total Meat Production

The USDA estimated total beef, pork and lamb production for the week at 789.5 million pounds. Last week's output was 711.7 million pounds, and the year-ago figure was 826.6 million pounds.

Broiler/fryer slaughter for the latest week were pegged at 108.455 million head, compared with 153.795 million the previous week and 123.442 million in the same week a year ago.