The total supply of pork in U. S. warehouses fell to its lowest end-of-December level for the past three years, but demand may slow as higher prices confront buyers.
Much of the lighter-than-expected frozen supply was attributed to improved exports.
“This is a three-year low, the lowest since the end of December 2006,” said Rich Nelson, livestock analyst with Allendale Inc. “This represents eight straight months of lower pork stocks.”
U. S. Depar tment of Agriculture put the end-of-December pork supply at 474.8 million lbs., down two per cent from end-of-November stocks of 482.8 million lbs. and down 15 per cent from the 555.6 million lbs. in storage last year.
The industry had been expecting a decline in total stocks following a pickup in exports during previous months. But the supply was less than anticipated and nearly eight million lbs. under the limited number of estimates circulating in futures pits.
“Exports picked up and we are showing the fruits of liquidation, so we had lower pork production during the month,” Nelson said.
“Typically this is a stock-building time for pork stocks so the fact that we took out eight (million lbs.) is a good deal. Normally we add five million (lbs.)” during December, he added.
The average pork price at its highest level since September 2008 may turn off demand.
“Hogs have been demand driven and the same thing on cattle – it’s been demand driven,” said Don Roose, president of U. S. Commodities Inc. “We had (pork) values that were pretty low and we do know that at the sharply lower values we had demand that was hot.”
The decline in hams during December was exceptional and showed additional buying above the normal Christmas ham sales. Much of the decline in ham and pork trimmings stocks was attributed to increased interest from Mexico.
USDA put end-of-December ham stocks at 49.9 million lbs., down from 83.4 million lbs. at the end of November and 74.2 million lbs. in storage last year. Trimming stocks declined to 45.5 million lbs. from nearly 65 million lbs. last year
“Mexican business has been the driver here. It was the Mexican business that put the last leg to the upside on the hams,” Roose said.
But belly stocks rose more than expected during the month. USDA reported belly stocks at 57.95 million lbs., above the limited estimates of 52 million to 53 million lbs.