It was speculated last week that winter weather disruptions could cause hogs to back up and prices to dip – but a climbing cash market and steadily rising pork cutout values since the start of the year strongly suggest otherwise, according to Steve Meyer and Len Steiner of the CME Group’s Daily Livestock Report.
Monday evening USDA quoted the overall pork cutout at $88.87/cwt., “a whopping $20.05/cwt or 29.1% higher than the same time a year ago, and just a few dollars shy of the all-time record levels established last year,” the economists reported. Nearby February lean hog contracts gained 45 points and closed at $84.95, about $2 over the Iowa/Minnesota cash price.
The cash hog price strength has been broad-based, with all the cutout components contributing to the increase in values over last year, the economists noted. The most notable gains have been in the price of pork bellies. Belly primal at $118.13/cwt is running 35% higher than a year ago. The strength in bellies can be traced to strong export demand led by South Korea offering 55,000 tons of bellies to enter the country tariff-free. Fast-food chains continue to add bacon to entrees, and concerns for escalating belly prices this summer are causing end users to rush to fill inventories.
“Overall, the story in the pork complex is that cash markets remain strong, and this has helped propel futures higher despite weather disruptions and heavy carcasses,” the economists explained.
Access the Daily Livestock Report at www.dailylivestockreport.com.