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Retail pork prices were 2.3 percent higher in June than May

by 5m Editor
18 July 2003, at 12:00am

US Weekly Hog Outlook, 18th July 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

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For the year through June, prices for pork at retail were 2.9 percent below 12 months earlier.

Live hog prices in June were 28.2 percent above a year earlier. All of the increase in live-hog prices came from reduced marketing margins. The packers' margin in June this year was down 2.5 percent, and the processor-retailer margin was down 12.2 percent from the same period in 2002.

Hog prices at the live level were 3.4 percent higher this year for the first 6 months than a year earlier. Again, all of the gain came from squeezed marketing margins, which were 4.5 percent less than the first half of 2002.

We do not have slaughter for June yet. Therefore, we cannot determine what the demand index for pork did for January-June, but the odds are high that demand was weak at the consumer level for pork for these six months.

Slaughter of hogs continues to run higher than expected. How much overrun we have had since June 1 is difficult to determine because of the labor problems in the packing industry in Canada during a part of this period. However, the odds are very high that we are now getting fewer slaughter hogs from Canada than last year. For January-April, slaughter hog imports from Canada were down nearly 23 percent this year compared to the same period in 2002.

Based on the June market inventories, we should be getting two percent less hogs now than a year earlier. This week, slaughter under Federal Inspection is estimated to be 1,828 thousand head --- up 0.8 percent from the same week last year.

Current slaughter would support a larger pig crop in December-February this year than earlier believed. The June Hogs and Pigs report shows a pig crop for those 3 months down 1.7 percent from 12 months earlier.

Slaughter since the first of June has been down less than one percent compared to last year. Even with the labor problems in the packing industry in Canada, the probabilities are high that we have received less live slaughter hogs from Canada during these 8 weeks than in 2002.

We still expect slaughter in late August and September to run below last year because of the relatively large number of hogs pulled forward as to marketing time last year during that period.

We now believe June will be the high month as to live hog prices for 2003.

Pork product prices lost ground this week with 1/4-inch trim loins this Friday at noon at $101.13 per cwt down $6.53 per cwt from last Friday. 1/4-inch trim Boston butts at $63.71 per cwt were down $6.21 per cwt; 12-14-pound bellies were not available; and 17-20-pound hams at $52.00 per cwt, up $1.00 per cwt from last Friday.

Prices for live hogs this Friday morning were steady to $2.00 higher compared to last Friday. Top live prices for Friday morning this week at select markets were: Peoria $40 per cwt, St. Paul $43 per cwt, Sioux Falls $42 per cwt and interior Missouri $40.75 per cwt.

Pork product prices will have to strengthen in order to get higher prices for live hogs.

Prices for 185-pound carcasses with 0.9-1.1-inch back fat, 6-square-inch loin, 2-inches deep by area this Friday morning were: western Cornbelt $57.64, eastern Cornbelt $58.17, Iowa-Minnesota $57.66 and nation $57.99.

5m Editor