Industry Awaits USDA Hogs and Pigs reportThe Iowa–South Minnesota market closed at $77.51 lean lb average last Friday. The market is better than a year ago’s $56.00 lb/lean or about $45.00 per head higher. Last week’s U.S.A. weekly hog marketings were 2,011 million, down 60,000 from the same week a year ago.
- To see market movement potential, watch for the average weight of hogs shipped. Last week Iowa-Minnesota was 2.0 lbs live weight heavier than a year ago. Slaughter weights usually start to decline fast after June 15 as hot weather comes into play. We need to see slaughter weights declining not only cutting pork tonnage, but also indicating currentness of market inventory.
- This Friday the USDA will release the June 1 Hogs and Pigs Report. We expect that year over year breeding herd and market inventory will continue to show declines. We would not be surprised that the inventory will be at multi-year lows. Reinforcement of low inventories could very well push prices higher.
- It appears there will be almost total shelving of the Other White Meat program. We don’t imagine it can be totally stopped as the National Pork Board paid several million dollars to the NPPC for the rights to the Other White Meat slogan. Total abandonment would in all likelihood force a right down on the National Pork Board financials.
- The Other White Meat program leaves a legacy of lost meat and poultry market share and a drop of U.S. per capita pork consumption. It is great to see the wisdom of the current National Pork Board to move away from the Other White Meat program.
- From what we can read, consumer surveys indicate major drivers as purchase motivators of pork are taste, flavor, and tenderness. Taste and flavor seems to make sense. In the twenty years plus of moving to lean hogs, we must ask why bellies and ribs have increased in relative value (not ever lean), while leaner products like hams and loins have dropped in relative cut-out value. Why are 500 lb sows now 60¢ lb live weight, while market hogs are lower in price than sows? Sows mostly go into sausages – never a lean product. Taste, flavor, juiciness – the purchase habit of consumers are telling us that’s what they want.
- In our opinion, the key to develop increased consumer demand is to adjust our pork from total lean to outside lean on the carcass, but with enough intramuscular fat that enhances taste, flavor and juiciness. This can and is being done through multigenerational genetic development. Minimize outside carcass fat while controlling intramuscular fat. New Iowa State developed software enables the ultra sound measurement of live breeding stocks for intramuscular fat. This, when augmented with detailed sibling carcass analysis, allows for selection of breeding stock that will meet the consumers desires of taste and flavor.
- Our own experience from marketing breeding stock is that producers put little or no consideration in meat quality characteristics when purchasing swine genetics. We have heard more than once, “meat quality makes sense, but packers don’t recognize or pay us for it, so why should we consider it important.” In one sense all true, except if we look at our industry and how to enhance demand and value, it would make sense to provide pork the consumer wants. Taste, flavor, and juiciness; it’s the key to driving pork demand and in turn profitability.
- This past week we had visitors from China with plans to put down up to 500,000 sows in their country. To keep it in perspective, that is less than 1.5% of China’s sow herd. The scale is mind boggling.
SummaryUSDA Hogs and Pigs Report to be released Friday will be the next big factor in price trends. We still expect cash lean hogs will reach back to the mid 80’s over the coming weeks, unless the U.S. dollar strengthens significantly making pork exports more expensive for buyers.
Categorised in: Pork Commentary
This post was written by Genesus