The relatively modest size of this week's hog kill takes my breath away. From Monday through Saturday, the slaughter for the first full week of September is estimated to be no larger than 2,174,000 head, an incredible 10.5% below the comparable week in 2012.
That's a staggering difference of 255,000 head, or roughly 50 million pounds of pork. This shocking shortfall is the equivalent of taking one of the largest Saturday kills last fall and just pretending it never happened.
According to the market hog weight breakdown contained in the June 1 inventory, late-summer and early fall offerings were scheduled to be steady to 1% smaller than the previous year. All of a sudden, that report looks as trustworthy as Syria's pledge to swear off chemical weapons.
In truth, actual hog slaughter has been coming in short vis-a-vis the June report since mid-August -- increasingly so. Between Aug. 17 and Sept. 7, federally inspected slaughter totaled approximately 8.57 million head, 3% below the same four-week period in 2012.
While this shortage was beginning to get my attention, we all know that official government estimates can have a tremendous amount of wiggle room. You know, close enough for government work, and all that.
But a 10% bust in numbers can hardly be brushed aside as tolerable wiggle, especially when it threatens to lend credence to long-voiced worry concerning the possible devastation of porcine epidemic diarrhea virus (PEDV).
First identified last spring as a serious pig killer with no known vaccine, PEDV has been hanging like a dark cloud over the industry for months. Although the gov has been tabulating reported cases since early summer, no one really had a clue as to the real pervasiveness of the deadly virus.
With the spring pig crop now beginning to reach market weight, the jury will soon be in on how bad this animal plague really is. This week's stunning 10% drop in slaughter (as well as the cash market's surging reaction of $4-$5) may be an early sign of an extremely bullish verdict.
For more of John's commentary, visit www.feelofthemarket.com
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