Source: MEATINGPLACE, 8/20/14

Pork margins fell midsummer but are holding up better than expected against the impact of the Porcine Epidemic Diarrhea Virus (PEDV), according to a Wall Street analyst.

Pork packer margins, which declined to $4 per head in July from $8 per head in June, should see a seasonal boost in August due to higher hog kills, predicted BMO Capital Markets analyst Kenneth Zaslow.

Meanwhile, Stephens analyst Farha Aslam said a pullback in hog futures is driving declines in cash hog prices as hog producers send animals to market to take advantage of the strong but fleeting price environment. She noted hog futures have declined sharply since hitting all-time record highs in early July.

Longer term, packer margins should be supported by supply expansion and the spillover effect of higher beef prices, Zaslow said.

Pork prices increased seven percent in July, supported by ham and trimming products as processors looked to refill sausage and hot dog orders for the last grilling holiday of the year, Labor Day. Belly prices limited appreciation due to lower retail demand, with processors drawing on cold storage, according to Zaslow.

Retailers promoted bacon in 12-ounce packages rather than 16-ounce packages, he added.

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