Hog Futures Can’t Catch A Break

The following market update was prepared and written by Jeff Swenson, DATCP livestock and meat specialist. It draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.

Financial headlines have negatively impacted agriculture commodity futures prices. Live Cattle and Feeder Cattle futures contracts posted significant losses the first three trading days of this week. A USDA Cattle on Feed report will be released today and could spark a recovery as the trade expects the report to show cattle in feedlots 4% lower than a year ago. The cash fed cattle market was steady to slightly higher last week. The estimated harvest was 634,000 head, 5,000 more than the previous week and 3,000 less than the same week last year. Harvest is on pace for a similar total this week. Carcass weights continue to decline. The likely factors are multiple winter storms impacting feedlot gains, as well as higher input costs contributing to cattle being marketed lighter. Outside market factors aside, beef demand has been healthy, motivating packers to continue sourcing cattle even if that means pulling cattle ahead. The Choice beef cutout value fell $4.41 last week to finish at $284.91. There was strength early in the week, but the cutout value lost momentum by midweek. If weakness continues, harvest pace likely will slow. 

Lean Hog futures contracts haven’t been able to catch a break in recent weeks. Financial news centering on banking concerns caused additional pressure this week and saw futures prices lower the first four days of this week. Cash hogs were up about 85 cents last week. The pork carcass cutout value posted weekly gains once again, ending last Friday $2.23 higher at $87.80. The value was about $1.50 lower by Wednesday of this week, mostly on softer ham, loins and picnic prices. Last week’s harvest was 2.497 million, 15,000 less than the previous week. Harvest continues to outpace last year, as the total was 25,000 head higher than the same week in 2022. National Pork Producers Council Economist Holly Cook recently reported wages for employees on U.S. hog farms have increased 10% in the past year, while the number of employees is down 2%.

Sheep and lamb prices continue to move higher even as harvest continues to outpace last year. Last week’s estimate of 36,000 head was 1,000 more than the previous week and 3,000 higher than the same week last year. The lamb carcass cutout value was higher last week after multiple weeks of lower prices ending last week $2.73 higher at $527.57.

January pork exports totaled 236,767 metric tons (mt), up 13% year-over-year, while export value climbed 16%. Exports to Mexico set an annual record in 2022, and set another volume record in January. January exports equated to $57.81 per head, up 8% from a year ago. Exports accounted for 27.2% of total January pork production. January beef exports were down substantially in most Asian destinations compared to the large year-ago totals. The decline was especially sharp in South Korea, where volume dipped 36%. January beef exports equated to $331.27 per head, down 34% from a year ago. Exports accounted for 12.7% of total January beef production. January exports of U.S. lamb muscle cuts totaled 222 mt, up 161% from year-ago volume, while export value essentially doubled to $1.1 million.

Fed cattle prices at Wisconsin and surrounding state auction markets were steady. High-yielding, high-grading cattle brought $135 to $160/cwt. Groups of high Choice and Prime lots sold from $160 to $172/cwt. The Holstein steer market was fully steady ranging from $114 to $142/cwt with the top end bringing $142 to $149 and some packages above. Silage fed, under finished or heavy dairy breed steers brought $78 to $113/cwt. Dairy x Beef steers were bringing $107 to $154/cwt. Cows were mixed. A bulk of the cows brought $64 to $87/cwt with some selling into the $110s. Doubtful health and thin cows were bringing $64/cwt and down. Dairy breed bull calves continued to sell higher, bringing $75 to $225/cwt with heavier, well cared for calves selling up to $275/cwt. Beef and Beef Cross calves were selling to $450/cwt with a few higher. Market lambs were bringing $141 to $152/cwt with reports of some light lambs selling higher.