Steiner and Company produces the Profit Maximizer report on behalf of National Pork Board based on information we believe is accurate and reliable. However neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.

Highlights

  • Weekly slaughter continues to hover around 2.5 million head/week while overall weights are running about 1% above last year. Spot availability viewed as adequate as Lent usually is a slow time for sales at retail.
  • Fresh pork appears to be in a better position, with loin, butt and rib prices well above year ago. High beef prices are expected to drive more retail features in Q2.
  • Ham prices expected to trade firm in the very near term. Big sales to Mexico the last two weeks and processors running production ahead of Easter are expected to underpin prices. Export trade is expected to be active in April as buyers look at futures implied summer prices.
  • Belly prices have been steadily moving higher although in the near term the upside is more limited. Inventories in May/Apr will be quite telling about the potential for summer prices.

Full Report

The average pork cutout value last week was  $98.6/cwt, less than 1% higher than a year ago. However, the performance of the various primals that make up the cutout varies. What stands out, and something we have noted for some time, is that fresh pork value has been tracking well above year ago for much of January and February.  Last week, the loin primal value was about 5% higher than a year ago, contributing an increase of $1.1/cwt to the value of the cutout.  Pork butt primal value was up 6.7%, contributing an increase of $0.8/cwt while ribs up 4.9% contributed $0.3% to the y/y gain. Processed items and hind/front feet, however, offset much of the y/y gain coming from fresh pork. The ham primal value last week averaged $82.2/cwt, 1.1% lower than a year ago while belly primal at $152.9/cwt was down 1.8%.  While front and hind feet account for a small share of the carcass, the 23% decline in value shaved around $0.8/cwt from the carcass value.  Lower exports to China, the main destination for these items, have significantly impacted feet values and we do not expect this to change.

Fresh Pork

Our working assumption is that retail fresh pork demand in Q2 will be better than a year ago. While we noted the differences in tastes and preferences that have helped support beef demand, we cannot ignore price effects.  The ratio of strap off boneless pork loins vs. ground beef is currently at the lowest point it has been in decades.  As recently as 2012, boneless pork loins traded at par (ratio of 100%) vs. the price of 81CL coarse ground beef.  Now the price of boneless pork loins is 40% of the ground beef price.  We ran run similar ratios for pork ribs vs. say beef briskets or steak cuts or pork butt vs. beef roasts.  There is no question that pork at retail is great value and something that retailers concerned about both price and availability are paying close attention to.

Processed Pork

The next four weeks will be a true test for the market. Seasonally belly prices are ho hum in March. Lent is part of the problem but also slaughter numbers generally are adequate and spring demand has yet to kick in. But prices have been steadily moving higher in the last few weeks. One thing that we have recently observed in the belly market is that it remains highly sensitive to changes in supply (note summer rallies and fall price slumps). If talk of a marketing hole in Q2 proves to be right, it could result in notably higher prices for May/Jun/Jul.  Futures are already pricing bellies (based on relationship to hogs) around $190/cwt.  Ham prices are steady in the near term but expected to be higher into late spring and summer as slaughter declines. And pork trim is expected to be above last year given the shortfall and high prices for beef trimmings.

Price Chart

Forecasts

Steiner Consulting Group produces the National Pork Board newsletter based on information we believe is accurate and reliable. However, neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.