Weather Disruptions Prop Up Prices, But Demand Concerns Persist

Highlights

• Hog slaughter was lower last week as snowstorms disrupted the transportation of hogs to processing facilities. U.S. hog producers are still incentivized to pull hogs forward as current prices are below the cost of production.
• Pork belly inventory at the end of January was a little over 70 million pounds, 57% higher than a year ago. Ample freezer inventories should keep belly prices in check through March. Higher prices are expected in Q2.
• Pork exports have been trending higher in recent weeks as world buyers take advantage of the attractive prices in the U.S. market. U.S. hog prices currently are trading at a discount to both the EU and Brazil (see page 30 of this report).
• Two consecutive weeks of big sales to Mexico have helped bolster prices for bone-in hams. Boneless ham prices, however, are running below year-ago levels as higher prices at retail have curtailed some of the domestic demand.