Although it didn’t come as a surprise, last week’s hog slaughter was up 3.7% higher than a year ago. Even with lower hog carcass weights, Steiner Consulting Group says the total pork pounds coming to market were about 33 million lb., 7% higher than just a few weeks ago.
Saturday slaughter was 156,000 head, Altin Kalo, chief economist for Steiner Consulting Group, says in the Daily Livestock Report. This is higher than the Saturday following the Fourth of July and the highest regular week Saturday slaughter since mid-February.
“Faced with extra loads of bellies at a time when processors are scheduling a shorter work week, packers had to drop the price and get traders involved. The result was a $66/cwt (‐35%) decline in the value of the belly primal vs. the previous week,” he says.
Belly prices have seen such big adjustments in the past, and Kalo says it’s not a given that lower prices in the fall are guaranteed.
“What makes it especially difficult to chart a predictable path for bellies for the fall, are the many potential demand factors at play. Retail sales likely benefited from the +20% decline in feature prices during July and August. Foodservice sales are uneven, with fast food potentially facing more headwinds as consumer budgets come under pressure. Bacon is a foodservice staple but depends on unit sales of chicken sandwiches and burgers to move,” he explains.
And don’t forget California. Currently much of the bacon sold in California is probably product that was produced before June 30, Kalo points out.
“Last week we noted how premiums paid for specialty pork, which would include Prop 12 compliant pork, have not moved that much. Some analysts and market participants noted to us that retailers may have simply reduced the footprint of fresh pork and bacon rather than try to pay up to get a supply that may not be there. This would be an issue for pork overall in the fall when supplies seasonally increase,” Kalo says.
Hog producers remain extremely current, he adds, as evidenced in the sharp decline in carcass weights. He believes this will help offset some of the seasonal increase in hog slaughter.
“And should demand surprise, be this export or domestic, then producers should be able to keep cash hog values from unraveling like they did in 2021,” Kalo says.
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