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Vol. 11, No. 32 / February 14, 2013
Please note that USDA offices will be closed on Mon- $/cwt
2011-13 PORK CUTOUT AND LEAN HOG CARCASS PRICE
Daily Price Close, IA/MN & USDA Carlot, Last Value is for February 13, 2013
day, February 18 in observance of the President's Day holi- 120.0
day. No daily price reports will be issued. Second, please
note a typo in our letter from yesterday. We transposed the 110.0 LH Futures
closing price for the choice cutout, rather than $188, which close on 2/13
was the index value for February 14, 2012, it should have read 100.0 Cutout
$183.45, the closing value on January 12, 2013.
90.0
Yesterday we pointed out the weakness in wholesale beef
markets and the impact this is having on live cattle values. Pork 80.0
wholesale prices are not faring much better, so far. While
hog values have rebounded from last fall’s crash, they have come 70.0
Hog carcass
under increasing pressure as prices for most pork primals are IA/MN, Wt. Avg
now well below year ago levels. The decline is not a result of 60.0
more pork coming to market. Weekly hog slaughter (based on a 2011 2012 2013
rolling 7-day moving total) is currently running around 1% above
year ago levels. And pork output has lagged the increase in Y/Y Change in Pork Primal & Cutout, $/CWT
slaughter as hog weights continue to run below year ago levels,
offsetting the higher hog numbers. The latest USDA Mandatory Pork Cutout (8.25)
Reporting data indicates the average hog carcass weights are
currently at 207.6 lb/carcass, 0.6% lower than a year ago.
Ham (1.77)
Looking at the performance of individual primals, a cou-
ple of items stand out. The loin primal continues to struggle. On Rib (0.84)
Wednesday, USDA pegged the loin primal value at $87.58/cwt, Picnic (1.08)
$12.34/cwt (12%) below year ago levels. The decline in the value
of the loin primal accounted for almost 40% of the overall decline Butt (2.00)
in the pork cutout. Retail meat sales have been sluggish so far Loin (3.15)
this year, as high retail meat prices force consumers to look at
less expensive alternatives or reduce the supply of meat they take Bellies 0.52
home. As with big beef roasts, retailers are having trouble mov- Other 0.07
ing items such as pork butts. Foodservice demand for top butts
$/cwt (10.00)
also has been disappointing. The top butt primal on Wednesday (8.00) (6.00) (4.00) (2.00) - 2.00
closed at $77.65/cwt, down $19.3/cwt (20%) from a year ago. The
decline in the value of pork butts (shoulder) accounted for a quar- Bottom line: Despite the weakness, one could argue that pork is
ter of the decline in the value of the cutout. Ham prices also re- in a better place than beef at this point. Pork at retail is priced
main weaker than a year ago . Hams should be performing better quite competitively compared to other proteins. Some items, es-
given that Easter this year is earlier than in 2012. The earlier pecially ribs and loins, will likely provide retailers with excellent
Easter tends to pull forward some of the seasonal purchases but feature opportunities this combing spring and summer. Export
so far that does not seem to be the case. The ham primal was demand, as always, remains critical since it accounts for about 1
last quoted at $61.12/cwt, down $7.1/cwt (10%) from a year ago. in 4 pounds of pork produced. Press reports have offered ample
The only item that is outperforming year ago levels are pork bel- coverage in recent days to the spat between US and Japan re-
lies, which are up 3% from last year. Even bellies have lost garding currency valuation. This is not a theoretical conversation
ground recently, however, with prices down some 20 cents a or financial mumbo jumbo on CNBC. It is critical to the pork
pound (12%) compared to a week ago. business, as it directly affects the sticker price for US pork in
world markets. It bears watching closely.
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