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Ron Plain

Bitterly cold winter weather was the dominant force in the hog market this week. Sub-zero temperatures in much of the upper Midwest and near record lows in the southeast slowed the movement of hogs forcing packers to raise their bids, especially in western markets. Sioux Falls topped out at $36/cwt and St Paul reported a practical top of $35.50/cwt on Friday. Peoria had a top of $34/cwt, as did the Interior Missouri market. The National weighted average carcass price Friday morning for negotiated hogs with 0.9-1.1" backfat, 6 sq. in. loins 2" deep was $47.23/cwt, $2.01 higher than last Friday. Regional prices on Friday morning were: eastern corn belt $46.08, western corn belt $47.57, and Iowa-Minnesota $47.66/cwt.

Despite higher hog prices, cutout values were lower, causing a big drop in packer margins. At mid-day on Friday, 1/4-inch trim loins weighing less than 21 pounds were trading at 91 cents per pound, down 0.84 for the week. The wholesale price of Boston butts dropped 3.7 cents to 53.8 cents per pound. Pork bellies dropped 54 from last Friday with 12-14 pound bellies ending the week at 74 cents per pound. Ham prices were steady at 47 cents per pound for 17-20# hams.

USDA released their livestock slaughter totals for December today. They show that 2002 commercial pork production was a record 19.665 billion pounds, 2.7% more than in 2001 and 2.0% more than the old record year of 1999. Commercial hog slaughter last year totaled 100.262 million head, up 2.3% from 2001 and the third largest yearly total behind 1999 and 1998. All this pork resulted in some very low hog prices and a lot of red ink for producers. Iowa State University's John Lawrence estimates the typical Iowa farrow to finish operation lost $16 per hog sold last year. As in the past, losses lead to increased sow slaughter. Nationally, we slaughtered 3.185 million sows in 2002, 5.8% more than in 2001. Boar slaughter, however, was down 14.8% in 2002 reflecting the continuing downsizing of the nation's boar herd as producers shift to artificial insemination. Compared to a decade earlier, 2002 sow slaughter was down 19.5% and boar slaughter was down 68.1%.

The futures market had an uneventful week. The 5 nearby contracts all ended the week within a dollar of where they started.

Federally inspected hog slaughter for this week is 1.898 million head, up 0.5% from the same week last year. We started the year with barrow and gilt weights slightly above year-ago levels. Slaughter weights will soon drop if temperatures don't warm-up quickly.

Feeder pig prices were lower, reflecting producers' reluctance to move young pigs to a new location during a cold snap. United Producers' tel-o-auction prices were: 40-50# $97.50/cwt; 50-60# $65-86/cwt; 60-70# $60-87.50/cwt; 70-80# $50-58/cwt; and 80# and up $41-51/cwt.

Look for warmer weather, increased hog movement and lower prices next week.