January-February pork production up 2.3 percent

US - US Weekly Hog Outlook, 28th March 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.
calendar icon 29 March 2003
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Ron Plain
Ron Plain

Pork production for January-February was up 2.3 percent from a year earlier. The number slaughtered was up 1.9 percent and weights were up 0.5 percent from 2002.

Slaughter has finally moved closer to a year earlier. For the past 3 weeks, the estimated slaughter under Federal Inspection was up only 1 percent.

The trade is expecting the Hogs and Pigs number to be down a little for March 1 compared to 2002. The average of the trade estimates are: all hogs and pigs 98.2%, breeding 96.2%, and market 98.5% of a year earlier.

This much reduction will be helpful but not reduce production enough to keep prices at or above average production costs for very many months this year unless we can have a pleasant surprise from either the supply or demand side of the equation.

With productivity growth even at the less than 2 percent level of the last 2 years, it requires a substantial decrease in the breeding herd to get the kind of supplies needed with current demand to get hog prices well above production costs.

Trade information does have some pretty substantial producers in financial trouble. However, producers with 1,500 sows or more with facilities that are in fairly good repair are not likely to go out of business. The herd just gets a new owner.

Hog prices moved the wrong direction this week. Top live prices this Friday morning were $1 to $3.50 lower than last Friday morning. Average carcass prices for 185#, 0.9"-1.1" backfat, 6 sq. in. loins 2" deep were by area: western cornbelt $46.65 per cwt, eastern cornbelt $48.15, Iowa-Minnesota $46.48 and nation $47.42.

Beef production is down for January and February but by only 1.9 percent from the record supplies of 2002. Broiler production is also estimated to be down about 2 percent. These are both positive but the big factor as to hog price is the 2-3 percent increase in pork production.

Pork product prices came under pressure this week and led the reduction in live and carcass prices. Loins with 1/4" trim at $89.00 per cwt at noon Friday were down $6.75 per cwt from a week earlier. Boston butts at $53.41 per cwt were down $3.46 per cwt, 17-20# hams at $54.50 were down $3.50 per cwt and 12-14# bellies at $89.00 were steady with a week earlier.

Slaughter this week under Federal Inspection was estimated at 1,906 thousand head up 2.3 percent from a year earlier.

There were no surprises in the March 1 Hogs and Pigs report. The total herd was down 2 percent, the breeding herd was down 4 percent, and the market herd was down 2 percent.

The market herd was down a little more than we expected but close to the average of the trade estimates.

Slaughter for both the second and third quarters should be off a bit more than 2 percent if it is consistent with this report.

We are holding with a $40-43 price for Iowa-Minnesota for U.S. 51-52 percent lean for the second quarter. For the third quarter, we are holding at $38-41 for the Iowa-Minnesota price.

A more detailed report will be on the AgEBB by noon Monday, March 31.

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