Retail pork prices are expected to be up substantially in June from May

Need a Product or service?

Ron Plain

Retail pork prices for May declined 2% from April this year and over 4% from May of 2002. Retail pork prices for January - May were 3.3% below a year earlier.

All of the decline in retail prices came from marketing margins for January - May. Live hog prices for this period were slightly higher than a year earlier. Both the processor-retailer margin and packer's margin for the five-month period were down from the same months in 2002.

Even though live hog prices were up a little from 2002 for these five months, they were still below production cost for the average cost producer. For 51%-52% lean hogs, the price averaged $37.24 per cwt live for January - April. The good news is that May prices were up nearly 20% from April at $43.62 per cwt for 51%-52% lean. The low prices lasted a long time, 17-18 months of losses for many producers.

Retail pork prices are expected to be up substantially in June from May.

Our preliminary numbers for the June 1 Hogs and Pigs Report are for the total herd to be down 2%, breeding herd down 4%, and market herd to be down 2% from a year earlier.

Both gilt and sow slaughter continue to support the belief that producers are continuing to reduce the breeding herd at a relatively slow rate. Sow slaughter after adjusting for herd size was up 6% and gilt slaughter was up 0.3% for the four-week period ending June 7th compared to twelve months earlier.

As one tries to project pork production for the next couple of years, the biggest unknown continues to be productivity growth. Will a growth of less than 1% in pigs per sow per year as in the twelve months ending February 28, 2003 continue or will growth in total move back in the 3% plus level as experienced on average in the fours years ending February 28, 2002?

If the lather comes back, we will have to continue to reduce the breeding herd near 3% to hold low $40s plus live prices for negotiated base prices. We believe the odds are low for hog producers to reduce the breeding herd another 3% or more in the next twelve months.

Hog slaughter for March through May was down less than 1%. However, slaughter for May through mid-June was down 1.6%.

Slaughter has fluctuated substantially week-to-week relative to last year as packers try to improve margins.

For example, slaughter for the week ending June 7 was down nearly 3% from a year earlier but slaughter for the week ending June 14th was up over 2% from last year.

We have not had a non-holiday week of less than 1.8 million slaughter, when rounded, under Federal Inspection to date this year. However, starting this week, we expect most weeks' slaughter to be under 1.8 million into mid-August. If this lower slaughter comes true, hog prices in July are likely to be a little stronger than in June.

Cash top hog prices live were $1 lower to $2.25 higher compared to last Friday. Average carcass prices this Friday morning were $0.84 to $1.40 per cwt highs from a week earlier.

The top prices live for select markets were: Peoria $43.50, St. Paul $44, Sioux Falls $45, and interior Missouri $45.75. Average 185 pound carcass prices with 0.9-1.1 inches back fat, six square inch loin, two inches deep by area for Friday morning were: Western Cornbelt $65.04 per cwt, Eastern Cornbelt $64.63, Iowa-Minnesota $65.27, and Nation $64.85.

Slaughter this week under Federal Inspection was estimated at 1795 thousand head --- down 1.4% from a year earlier.