USA

US: Lower Packer Demand for Hogs in October Reduced Pork Production

Pork

Lower gross packer spreads are likely a major factor behind recent lower packer demand for hogs and lower than expected October pork production, according to the latest USDA report.

Posted on Nov 20 ,06:06

 

Estimated federally inspected hog slaughter in October was about 10.9 million head. Weaker than expected Friday and Saturday slaughter numbers and sharply lower October gross packer spreads (estimated pork carcass cutout plus byproduct drop value, minus lean hog price) suggest that some packers scaled back slaughter rates in order to resuscitate spreads that were squeezed by increased hog demand after two new Midwest packing facilities opened in September.
The gross packer spread in October averaged $21.10 per cwt, more than 24 percent lower than the same period a year ago.

For the balance of the fourth quarter, packers are expected to limit weekly slaughter numbers, thereby pressuring hog prices lower and nudging wholesale pork prices higher.
Fourth-quarter pork production is expected to be 6.95 billion pounds, 4.6 percent higher than a year ago. Prices of live equivalent 51-52-percent lean hogs are expected to average $38-$40 per cwt, almost 5 percent above a year ago.
To the extent that slower schedules delay the slaughter of market-ready hogs in the fourth quarter, these hogs are expected to be carried forward and slaughtered early in 2018. In addition to higher expected slaughter numbers, higher average dressed weights contribute to the 70 million pounds of production added to commercial pork production in the first quarter of 2018. First-quarter pork production is expected to be 6.7 billion pounds, 4.7 percent more than a year ago. Average hog prices for the first quarter are forecast at $45-$47 per cwt, about 8 percent below the same period a year earlier.

Comments

Similar articles