Need a Product or service?

Ron Plain

Slaughter this week did decline seasonally but was still up 1% compared to a year earlier. Slaughter was below 1.9 million head this week for only the third week this year. Based on the March Hogs and Pigs, slaughter should drop below a year earlier within a week or two.

We are a bit concerned that slaughter will continue to run above year earlier levels until at least May. Based on our gilt data, producers did not start reducing the breeding herd until mid-June 2002. If this data did correctly spot when the decline in the breeding herd started and productivity of the herd did not decline, one would not expect slaughter to drop below a year earlier before around mid-May.

Productivity growth did decline for the year ending February 28, 2003, but all the decline was in carcass weight. The number of pigs saved per animal in the breeding herd was up 0.65 percent. Therefore, the probabilities may be low for slaughter to decline relative to last year as indicated for April and May in the March Hogs and Pigs.

Based on the Hogs and Pigs report, productivity growth has declined for the last 3 years ending March 1. For the year ending February 29, 2000, productivity growth was 5.47 percent; for the year ending February 28, 2001, productivity growth declined to 3.02 percent; for the year ending February 28, 2002, it declined to 2.73 percent; and for the year ending February 28 this year, the productivity declined by 0.66 percent from a year earlier. However, as indicated above, the decline was due to average carcass weights being 1.31 percent below a year earlier for the last year.

For 2002, our calculation of the average net prices received by producers as reported by the checkoff data was $3.74 per cwt above the terminal markets. A significant part of this higher price was probably due to marketing contracts that shift some price risk.

Based on the mandatory price reporting data, over 30 percent of the hogs marketed by independent producers was under a price risk shifting contract. Almost 80 percent of the hogs are marketed by independent producers based on the mandatory price reporting data.

Hog slaughter this week under Federal Inspection was estimated at 1880 thousand head up 1% from a year earlier. Gilt and sow slaughter data in recent weeks indicate producers are still reducing the hog breeding herd.

Pork product prices were mixed for the week, but there were more cuts with reduced prices than gains. Bellies at $91 per cwt were up $2 per cwt for the week and were the highest priced wholesale cut.

Hog prices weakened some for the week. Top live prices Friday morning were from steady to $1.50 per cwt lower than 7 days earlier. Top live prices for select markets were: Peoria $31; St. Paul $32; Sioux Falls $32 and interior Missouri $32.50. The average price for 180# carcasses with 0.9"-1.1" backfat 6 square inch loin 2 inches deep were: western Cornbelt $44.93 per cwt, eastern Cornbelt $44.93, Iowa-Minnesota $45.03 and nation $46.29.

Feeder pig prices as United Tel-O-Auction were steady to a little higher than 2 weeks ago. Prices by weight groups were: 40-50# $83- 97.50; 50-60# $76 and 70-80# $80.

Early weaned pigs have dropped back into the $20 range and low $20's in some markets in the last few weeks.