Winter storms across the country have resulted in significant pork and beef supply disruptions in terms of livestock moving to processing plants as well as beef and pork moving to population centers, Steiner Consulting reports in its latest Daily Livestock Report.
“The impact from such events is difficult to discern as they are happening, it impacts both the supply side of things but it is also important to consider the potential demand effects down the road,” says Altin Kalo, chief economist at Steiner Consulting.
Hog Market
Hog slaughter in the first three days of the week ending Jan. 12 was about 9% below expectations. Kalo notes that pork cutout during this period traded largely sideways, but there is a lot of volatility in the value of specific primals and trim. On Jan. 10, the cutout saw an uptick in the afternoon, rising close to $87/cwt but Kalo says it’s likely to pull back by the end of the week as supply recovers.
“Probably the most significant increase in pork has been for bellies and trim,” he says. “On Jan. 10, the value of the belly primal was 17% higher than the previous week while gains for other primals were somewhat more muted. This underscores, once again, what we see as critical for the pork market going forward ‐ bellies hold the key, especially in the spring and summer months.”
As for futures, Kalo points out that fed cattle have traded sideways, in part because of the implications of reduced marketings at a time when front end supply (cattle ready for marketings) remains heavy.
“The higher cutout does not help cattle as much as it does hogs, which are pricing in part based on cutout. Yes, a higher beef cutout helps improve packer margins, but as last year showed, the most significant important bargaining tool for feedlots is a current supply,” Kalo says.
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