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Retail pork prices set record high in July

By Doug Schmitz
Iowa Correspondent

LAKEWOOD, Colo. – The retail pork price set a record high in July, while strong hog prices are continuing to support producer returns, according to an Aug. 13 analysis by the Livestock Marketing Information Center.
“The retail pork price set a new record high of $4.60 per pound in July, beating last month’s record of $4.55,” the analysis read. “July’s price was 1.2 percent above the prior month, and 10.1 percent above last year.
“Strong retail pork prices have supported the cutout value, which was $125.23 per cwt (central hundredweight or 100 pounds), the highest value since mid-June when it reached $134.13,” the analysis added.
In addition, cutout has been supported by a strong belly primal value, which reached a record high of $233.78 per cwt (central hundredweight or 100 pounds).
“Marginal strength in the loin and picnic primal values of $116.42 and $96.18 per cwt (central hundredweight or 100 pounds), respectively, (the previous week) have also supported the cutout value,” the analysis said.
“Record retail pork prices and a strong pork cutout value are aiding hog prices (National Base Carcass), which were $105.12 per cwt last week, $3.23 off the high set in late-June, but nearly double the price from 2020,” the analysis added.
Moreover, strong hog prices are continuing to support producer returns.
“Iowa State University’s July estimated returns for a farrow-to-finish operation were $51.41 per head, a slight dip from $62.58 the prior month, but much improved from the $21.55 loss just a year ago,” the analysis said.
“Estimated returns have been positive for the last six months which have been supported by improved carcass selling prices averaging over $108 per cwt (central hundredweight or 100 pounds) the last four months,” the analysis added. “July’s carcass selling price was $109.08 per cwt (central hundredweight or 100 pounds), with a breakeven price of $86.34 per cwt (central hundredweight or 100 pounds).”
Ron Plain, University of Missouri professor emeritus of agricultural and applied economics, said in his Aug. 30 hog analysis, “Calculations by Lee Schulz at Iowa State University estimated farrow-to-finish profits at $62.58 per head for hogs marketed in June. That was the fifth consecutive profitable month and the highest profit since September 2014.”
Plain said because COVID-19 disrupted hog slaughter in 2020, the relationship between the heavyweight inventories in the USDA’s June 1 Quarterly Hogs & Pigs Report and the subsequent June-August hog slaughter “is more consistent in 2021 and 2019.”
“The average price of pork in grocery stores during the month of July, $4.602 per pound, was record high for the fourth consecutive month,” he said. “The average retail pork price was up 5.6 cents from June. and up 42.3 cents from July 2020. Retail pork prices often peak one month after the peak in cash hog prices.”
“Imports equaled 3.6 percent of U.S. pork production, and exports equaled 27.5 percent of our production,” he said. “The increase in imports reflects bigger shipments from most of our major foreign suppliers. The increase in exports is a balance of a big drop in shipments to China and growth in U.S. pork exports to Mexico, Japan, Canada and South Korea.
“As should be expected, large profits this year are impacting sow slaughter,” he added. “During the first 11 weeks after the first of June, U.S. sow slaughter was down 10.1 percent. The drop is due in part to the fact that sow slaughter was up 13 percent during the same period last year.”
Currently, the USDA is moving to shield U.S. pork exports should African swine fever spread from the Dominican Republic to Puerto Rico or the U.S. Virgin Islands, he said.
“Under trade rules for Foreign Animal Disease Protection Zones, an outbreak in one zone does not necessarily stop trade from another zone.”