First, let’s consider some key weekly variables in today’s Production and Price Summary:

The biggest reduction was seen in beef output which fell 6.8% from the previous week and 6.5% from last year. Sharply lower slaughter (only 582,000 head) was the big driver since average carcass weights, at 787 pounds, continued to be significantly higher (3.6%) than one year ago.

Fed steer prices gained, on average, 0.17/cwt. of 0.1% last week from one week earlier. The 5-market average of $122.08/cwt live was 2.5% higher than one year ago.

The Choice grade cutout declined again last week, losing 1.7% from the previous week to average $177.79/cwt. That value is 5.8% lower than last year in spite of these sizable reductions in supply — all the result of soft demand and lower trim prices from the damage to LFTB.

Hog slaughter fell sharply (3.8%) from the prior week as some plants were dark on Monday in observance of Easter. The week’s 2.044 million head was 0.77% more than one year ago and just slightly below (by 18,000) our estimate based on the March Hogs and Pigs report.

Hog weights were steady with last week and only 1 pound higher than last year at 209 pounds. Pork production was 3.8% lower than the prior week and 1.4% higher than in ‘11.

National net lean hog prices were steady for the week but remained nearly 9% lower than last year. The cutout fell to $78.33, 18.3% lower than in the same week in 2011.

Chicken slaughter and production continued to be MUCH LOWER than last year. Slaughter for the week that ended 4/7 (the latest data available) was 7.5% lower than last year and 1.3% lower than last week. Weights were LOWER than both the previous week and last year as well, pushing production down by 8.2%, year-on-year. Egg sets and chick placements were 4.5% and 4.3% lower than last year, respectively.

Only 3.95 million turkeys were processed the week of 4/7, 12.6% fewer than the previous week (we suspect that was due to some Good Friday holidays) and 9% lower than last year. Slightly higher weights left production down 7.9% from 2011. Whole hen prices remained strong at $107.25, +11% from ‘11.

We mentioned on Friday that China-Hong Kong would be a key market if U.S. pork exports are to perform anywhere near as well as last year. But just how well must they perform? A huge question in 2012 is whether purchases by China-HK would fall as they did in 2009. We don’t think so primarily because shipments in 2008 were driven mightily by the Olympic games where shipments last year were driven by, we think, more permanent concerns — death losses among China’s hog herd, rising food prices, a desire to control inflation. All of those are continuing to various degrees in ’12. Turns out that exports to China-HK need to average almost precisely their February level for ‘12 to match ‘11 for pork products. That is still a pretty tall order but much less daunting than thinking we have to hit 40,000 metric tons in a couple of months.

Maybe the more daunting task will be matching last year’s variety meat shipments. Those need to average 17,180 tons or so this year and February’s total was just 11,488 tons. For both pork muscle cuts and variety meats, Mexico appears to be the better bet for 2012 — if the peso can gain, or at least maintain, value.