While pork exports have been strong, there may be some demand concerns as the market moves past Memorial Day.
“Pork loin prices have failed to gain traction so far this spring, even as pork loin exports into traditional Asian markets have been quite robust,” Len Steiner and associates wrote in their Daily Livestock Report May 24.
“It is our opinion that extensive beef features for Memorial Day may have crowded out (some) pork sales in the short term. This could change in June and July, however, considering that pork currently offers significant value.”
May pork loin primal prices averaged just under $75 per hundredweight, down 9 percent from a year ago.
“The value of the loin primal yesterday (May 23) was only slightly higher than it was at the start of the month, when normally we would expect higher prices as grilling season gets underway,” Steiner and associates said. “The year-to-year decline in the value of the loin primal has removed about $2/cwt. from the overall value of the pork cutout.”
June hog futures are priced in the $74 range, making the cutout value around $80/cwt.
“The question that market participants are pondering is where the additional values will come to get the cutout to those levels,” Steiner and associates said. “We would think higher loin prices are needed in order to bridge the gap between current cutout value and what futures are implying.”
Ham prices remain lower as well, with most buyers holding off on adding to freezer inventories as pork supplies should be larger in the third quarter and on into late fall and winter, they said.
“Between loins and hams, half of the hog carcass has failed to establish an upward trend so far,” Steiner and associates said. Seasonally, ribs and butts tend to peak in June. “Getting bellies to carry the carcass into August may be a stretch.”
Cutout values did increase slightly leading up to Memorial Day. Steiner and associates said this is seasonal and likely not an indication of prices down the road. Hog weights have started to trickle downward, but will likely move up after June 1.