The hog follows the pork down

Hogs broke this week. Packers paid $68.89 for Thursday's hogs, a price last paid in January 2021, and the December lean hog contract lost 10% in five days. The pork coming off those hogs had been falling for a month. This week the animal caught up with the meat.

Supply did not do this. The hog kill ran 1.2% over last year, and export buyers booked 24% more pork than their four-week pace, with Mexico taking more than half. My read, not a print: the buyer who quit is the one at home, and the belly says so. The derind belly sits 45% under its usual price for this week, a gap that puts the belly back where it stood in the spring of 2020.

Cattle went the other way inside the week. Steers sold at $228 on Monday and $223.65 on Friday, and the futures closed the week at 224, under Monday's trade.

Monday's five-area print of $227 was the week's high, not its average, and the weekly average that prints Monday will not be the same series as last week's: on October 26 USDA put Texas, Kansas and Colorado back into the five-area report after months of leaving them out for confidentiality.

With the Choice cutout slipping to about 365, the beef packer lost about $137 a head after plant costs on the week's prices, more than $100 worse than last week. Over four weeks he is still about $23 a head in the black.

The kill ran about 530,000 head through Friday, 4.5% under the same week last year. USDA confirmed screwworm in a dog in Cochise County, Arizona, on Wednesday, the county the Douglas crossing sits in, and said nothing about pausing it. Nogales is still set to open November 30 if the checks hold.

The overseas buyer stepped back. Beef export sales for the week ending October 22 came in 33% under their four-week average after two weeks well over it.

Brisket is down 12% in four weeks and outside skirt 13%, against a Choice cutout off about 2.5%. Both are falling on their own, not with the carcass. Take them for orders you already hold.

At home the ad page gave back last week's moves. Rib features lost about 10,400 stores, and ground beef took back most of what it had lost, holding its place as the biggest section at about 36,000 stores.

Flank steak is one of three beef cuts under its usual price for the week, at 22% under, while 47 of the 53 cuts we track sit over theirs. Buy flank while it is the odd one out.

Belly is the primal that broke. The belly primal averaged about $74 this week, a level it last held in April 2020, and the derind belly is 45% under its usual price for late October after a 20% fall in four weeks.

The pork cutout closed Friday at $70.10, down 17% in four weeks, a close it last made in December 2020. USDA counted more pork and more bellies in freezers at the end of September than a year before, so there is belly waiting, not a shortage.

Retail is leaning on the loin, not the belly. Loin features added about 5,600 stores, the biggest gain on the pork page, while processed pork lost 6,500. St Louis ribs are off 12% in four weeks with the belly. Buy belly and St Louis ribs forward for the weeks you can place them, and cover loin where the ads are pulling.

Supermarket flyers added about 18,000 stores of chicken this week after dropping 13,000 the week before, and none of the new money went to parts. Prepared items, whole birds and ground chicken took the gain while parts lost stores.

Wings slipped 3% on the week to about 107 cents and sit a quarter under their usual price for this week. Tenders are a fifth under. Cover US wings and tenders at these prices. Leg quarters and boneless thigh meat are a quarter over their usual level; leave them. Canadian buyers: Canada added 453 tonnes to the CPTPP re-offer on October 26 and the WTO re-offer is fully taken, so the room to land US parts is on Quota Watch.

Hogs at a January 2021 price, bellies at a spring 2020 level, and a cattle trade that faded from Monday to Friday. Monday: buy belly and St Louis ribs forward, cover loin where the ads are, take brisket, outside skirt and flank for orders you hold, and cover US wings and tenders. Watch Thursday's export sales for the beef buyer overseas, and the zone USDA draws around the Cochise County case: a pullback at Douglas is the one thing that changes the cattle side.