Poultry and Pork Production Key to Prices

CANADA - The Saskatchewan Ministry of Agriculture expects levels of pork and poultry production and the volumes of meat in cold storage to be key factors influencing live hog prices during the remainder of 2008, writes Bruce Cochrane.

Live hog prices showed improvement in February but they appear to have peaked turning downward over the last few weeks.

Brad Marceniuk, a livestock economist with the Saskatchewan Ministry of Agriculture reports U.S. slaughter numbers continued to increase in early 2008 putting more pork into U.S. cold storage while the volumes of poultry in cold storage have also been significantly higher, pressuring meat prices overall.

Brad Marceniuk-Saskatchewan Ministry of Agriculture

U.S. pork demand continues to be good but the problem is, again, we've had increased pork production early in 2008 so production continues to increase while demand is still relatively strong but that still has caused U.S. pork in cold storage numbers to be up...up over about 100 million pounds from December 31, 2007 to January 31, 2008.

You combine that with poultry stocks, that have been up about 100 million pounds, we've got a really big increase in meat in U.S. cold storage stocks.

That's about a 200 million pound increase from December to January which is a significant increase, again, which has been very negative to meat prices in general.

Overall meat production early in 2008 will be very important in determining where overall meat prices will go.

We need to see a decline in pork production and poultry production and that should help prices improve if we do see that.

Marceniuk points out the February Statistics Canada report indicates Canadian hog production is declining and, while the December USDA report showed U.S. hog production was increasing, recent large losses will result in U.S. production starting to come down shortly as well.

He predicts North American consumption will continue to be important but he stresses we do need to see increased exports and countries like China, Japan and Russia will be very important in helping reduce those North American cold storage levels.