By Jerry Bieszk
CHICAGO, Aug 23 (Reuters) - The average U.S. pork price hit a record high for a second straight day on Monday amid strong exports and tight supplies, according to government data and traders.
The average pork price reached a record of $97.79 per cwt on Monday, beating Friday's record high of $95.49, said the U.S. Department of Agriculture. (Graphic: http://link.reuters.com/run95n)
The data helped to bolster confidence among traders that domestic demand for pork was improving. There had been concerns that rising prices could curb domestic demand.
'Production is down and exports are up and I'm starting to feel better about domestic demand,' said Ron Plain, livestock economist at the University of Missouri.
'And when I also look at the beef numbers, it looks to me like maybe we're looking at a bit stronger demand ahead of us.
'The meat supply is tight but I wasn't expecting record cutout (average pork price) values,' Plain added.
Gains were recorded in most average pork products as reduced production and good demand boost pork prices.
The average price was up $2.30 on Monday and has risen $3.43 per cwt in the past two days and has gained $7.14 per cwt in since the start of August.
ECLIPSES RALLY IN 2008
The recent run-up in cash pork prices exceeded the previous record highs posted in August 2008 when China was buying pork to meet demand for the Olympic Games it hosted.
The rally this time was fueled by very tight bacon supplies, which lifted cash pork belly prices to a record high of $150 per cwt recently, traders said.
But the traders said the market could be nearing a top.
Cash and futures markets broke sharply back in 2008 once China completed its purchases and that kind of price break could come again if the high prices shut off demand, said Dan Norcini, an independent hog trader.
'Once that high was posted (in 2008), the cutout (price) dropped 20 percent over the next three-week period. Cash hog prices fell 21 percent over the same period, with futures dropping nearly 11 percent over that same time period,' he said.
In the meantime, demand for certain pork products still remained strong and that may offset the seasonal increase in hog marketings and stepped up pork production.
Spring hogs should be coming to market soon.
'It's still BLT (bacon, lettuce and tomato sandwich) season. It's still grilling weather and I'm not looking for demand to soften any time real soon, but the supply should be increasing,' Plain added.
(Editing by Lisa Shumaker)
((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) Keywords: PORK RECORD (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
CHICAGO, Aug 23 (Reuters) - The average U.S. pork price hit a record high for a second straight day on Monday amid strong exports and tight supplies, according to government data and traders.
The average pork price reached a record of $97.79 per cwt on Monday, beating Friday's record high of $95.49, said the U.S. Department of Agriculture. (Graphic: http://link.reuters.com/run95n)
The data helped to bolster confidence among traders that domestic demand for pork was improving. There had been concerns that rising prices could curb domestic demand.
'Production is down and exports are up and I'm starting to feel better about domestic demand,' said Ron Plain, livestock economist at the University of Missouri.
'And when I also look at the beef numbers, it looks to me like maybe we're looking at a bit stronger demand ahead of us.
'The meat supply is tight but I wasn't expecting record cutout (average pork price) values,' Plain added.
Gains were recorded in most average pork products as reduced production and good demand boost pork prices.
The average price was up $2.30 on Monday and has risen $3.43 per cwt in the past two days and has gained $7.14 per cwt in since the start of August.
ECLIPSES RALLY IN 2008
The recent run-up in cash pork prices exceeded the previous record highs posted in August 2008 when China was buying pork to meet demand for the Olympic Games it hosted.
The rally this time was fueled by very tight bacon supplies, which lifted cash pork belly prices to a record high of $150 per cwt recently, traders said.
But the traders said the market could be nearing a top.
Cash and futures markets broke sharply back in 2008 once China completed its purchases and that kind of price break could come again if the high prices shut off demand, said Dan Norcini, an independent hog trader.
'Once that high was posted (in 2008), the cutout (price) dropped 20 percent over the next three-week period. Cash hog prices fell 21 percent over the same period, with futures dropping nearly 11 percent over that same time period,' he said.
In the meantime, demand for certain pork products still remained strong and that may offset the seasonal increase in hog marketings and stepped up pork production.
Spring hogs should be coming to market soon.
'It's still BLT (bacon, lettuce and tomato sandwich) season. It's still grilling weather and I'm not looking for demand to soften any time real soon, but the supply should be increasing,' Plain added.
(Editing by Lisa Shumaker)
((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) Keywords: PORK RECORD (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.