Hog slaughter continues to run above expectations

US Weekly Hog Outlook, 1st August 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.
calendar icon 2 August 2003
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Ron Plain
Ron Plain

Cash hog prices fluctuated some this week but showed some decline for the week. Top live prices this Friday were steady to $4 per cwt lower compared to a week earlier. Prices for select market were: Peoria $38, St. Paul $37, Sioux Falls (N/A) and interior Missouri $39.25.

Average carcass price for negotiated base price for 185-pound carcass with 0.9-1.1 inch back fat, 6 Sq inch loin, 2 inches deep this Friday morning were 0.671 to 1.09 lower compared to a week earlier. Prices for the western Corn Belt $57.03, eastern Corn Belt $57.33, Iowa-Minnesota $57.02 and Nation $57.15 per cwt of carcass.

Pork product prices continue at levels near a week earlier on Friday. Loin prices with ¼ inch trim this Friday noon at $96.27 per cwt down $0.09 per cwt compared to 7 days earlier. Boston butts at $62.36 down $2.64 per cwt. Ham at $50 per cwt down $0.29 from last week. Bellies weighing 12-14 pounds at $97 per cwt down $2.00 from the same day last week.

Hog slaughter continues to run above expectations. This week's slaughter under Federal Inspection was estimated at 1815 thousand head down 0.1 percent compared to the same week last year.

We do believe the probabilities are very high for slaughter to drop below year earlier levels before we get through August and stay below last year at least through September. However, average weekly slaughter will increase seasonally as we move through August.

The odds now appear very high for hog prices to continue sideways to lower as slaughter increases.

One of the reasons for the lack-luster hog prices is the relatively weak demand for pork at the consumer level. Based on preliminary data, demand for pork at the consumer level for January-June was down between 3 and 4 percent. The good news is that the demand for live hogs for the first 6 months of 2003 was up a short 1 percent. However, this was due to narrower marketing margins than a year earlier.

Pork consumption for January-June is estimated to be up a short 0.5 percent per capita compared to the same months for 2002. Pork production was up about 0.5 percent compared to last year. Slaughter weights continue to run well above last year. Barrow and gilt carcass weights for the week ending July 19th were 2 pounds above last year and live weights for barrows and gilts up for week ending July 26th were up 2.9 pounds from the same week in last year.

These data suggest the probabilities are high that we have delayed marketings at least a little this summer rather than pull marketings forward.

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