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Ron Plain

The big news this week was the Monday release of USDA's December hog inventory survey (breeding herd down 3% and the market hog inventory down 1%). Most of the numbers came in slightly higher than prerelease trade estimates. The futures market responded on Tuesday with several contracts down the $2 limit. Much of this drop was recovered on Thursday and Friday.

The disappointing news was that the inventory of pigs weighing 60-179 pounds was unchanged from a year ago and December-February farrowings are expected to be only 1% smaller than year earlier. This will mean hog slaughter during the first half of 2003 should be within 1% of this year and prices could struggle to make it to the high $40s on a live weight basis.

USDA's December survey, however, bodes well for the second half of 2003. Both the December 1 breeding herd and March-May farrowing intentions were 3% smaller than year-ago levels. Pigs per litter continue to show no year-over-year increase. This should hold fourth quarter 2003 live hog prices in the upper $30s.

The easiest number to get a quick read on is the inventory of pigs weighing 180 pounds or more on December 1. The report said there were 2% fewer than a year earlier. However, hog slaughter in the 5 weeks since December 1 has been 1.6% higher than a year ago. Let's hope this relationship doesn't continue.

Hog prices ended this week steady to $2 higher than last Friday. Sioux Falls reported a practical top of $33/cwt on Friday. St Paul had a top of $31.50 and Peoria topped out at $31. Interior Missouri had a $29/cwt top. The National weighted average carcass price Friday morning for negotiated hogs with 0.9-1.1" backfat, 6 sq. in. loins 2" deep was $42.19/cwt, $1.86 higher than last Friday. Regional prices on Friday morning were: eastern corn belt $41.87, western corn belt $42.31, and Iowa-Minnesota $42.23/cwt.

The total federally inspected hog slaughter for this week is 1.747 million head, up 11.9% from the same week last year. Based on preliminary data, 2002 commercial hog slaughter totaled 100.263 million head, up 2.35% compared to 2001 and commercial pork production totaled 19.668 billion pounds, up 2.76% from 2001. Pork production in 2002 was a new U.S. record and hog slaughter was the third highest ever, after 1999 and 1998.

At mid-day on Friday, 1/4 inch trim loins weighing less than 21 pounds were trading at 87 cents per pound, down 114 for the week. The wholesale price of Boston butts held steady at 52 cents per pound. Ham prices were up 0.5 cents at 43 cents per pound for 17-20# hams. Pork bellies dropped a penny with 12-14 pound bellies ending the week at 81 cents per pound.

Sow slaughter has been above year-ago levels for 12 of the last 15 weeks. Our gilt slaughter data has also been above year-ago levels 12 of the last 15 weeks.