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The results of the quarterly survey came in outside the high range of expectations. However, there is plenty of uncertainty about future supply as expectations for growth largely hinge on productivity improvements. Breeding herd on December 1 was still 0.9% lower than a year ago, which will tend to cap growth this winter.
Hog slaughter last week was at the highest point in five years. Robust packer margins and the need to ramp up production ahead of short holiday weeks contributed to the uptick.
As expected slaughter was down about 300k head from the previous week with plants closed for Thanksgiving. The decline in slaughter and meat processing plants returning to full production schedules next week should push up prices next week, particularly hams but also loins and butts.
Hog slaughter last week was around 15,000 head less than initially expected, in part due to plants doing maintenance work ahead of the holidays. Expectation is for slaughter to continue to run near 2.6 million head/week through mid-December but then trend lower into January.
Pork supply is currently on the upswing, consistent with the seasonal trend for this time of year. While official USDA data is missing, preliminary estimates put slaughter at near 2.9 million head per week, just shy of last year’s levels.
Pork trim prices were counter seasonally higher in the previous three weeks but the increase in supply has finally started to catch up with this market. Strong demand should keep prices above year ago levels but prices in Nov/Dec are expected to be lower than current levels.
The results of the ‘Hogs and Pigs’ survey will be published on Thursday. Expectations are for a very modest increase in supply this winter following with some supply expansion next spring and summer.
Pork supply continues to fall short of estimates, supporting pork prices, especially for raw material used in processed items. Hams, bellies, and trim are all up double digits from last year as short-bought buyers scramble for spot market product.
With Labor Day weekend coming up, there will be some volatility both in terms of pricing and supply. Hog slaughter is expected to quickly climb above 2.5M head/week by mid September. This should help ease some of the tight supply, especially trim.
Hog supply continues to fall well short of expectations. Based on the June USDA survey, slaughter last week should have been 0.5% above last year. Instead, in the last four weeks slaughter has averaged 3.5% vs. a year ago.
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