Hog slaughter could put additional downward pressure on hog prices

US Weekly Hog Outlook, 8th August 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.
calendar icon 9 August 2003
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Ron Plain
Ron Plain

Pork product prices rallied some this week. Loins with a 1/4-inch trim at noon Friday were at $106 per cwt---up $9.73 per cwt for the week. Boston butts with 1/4-inch trim were $75 per cwt, which was up $12.64 per cwt from 7 days earlier. 17-20 pound hams at $54 per cwt were up $4.00 per cwt and 12-14 pound bellies at $100 per cwt were up $3.00 per cwt compared to last week.

Slaughter continues to run above expectations. For the 4 weeks ending July 26, we imported enough more slaughter hogs from Canada to account for about 1.1 percent of the total number. Hog slaughter in total for this 4- week period was up 0.8 percent from last year. We are close to being in the market inventories on June 1 weighing below 119 pounds, which were down 3.5 percent from a year earlier.

Slaughter for this week under Federal Inspection was estimated at 1,805 thousand head---down 0.1 percent compared to last year.

We are getting close to the period last year when producers were pulling marketings forward. For example, in early August of 2002 marketings were about 4 percent above a year earlier. By the last 2 weeks ending in August, marketings were up 9 percent from a year earlier. Therefore, the odds are very high for slaughter to drop substantially below last year by the time we get to late August. However, marketings are expected to increase seasonally as we move through this month. For 1999, 2000 and 2001 the increase in slaughter from the first week of August to the last week of August averaged between 6 and 7 percent. If we get a 6.5 percent increase this year from early August to late August the last week in August, slaughter will likely be plus or minus of 1,925,000 head.

This much increase in slaughter will put additional downward pressure on hog prices. Yield 3 choice beef prices have moved back up to around $140 per cwt this should be a supporting factor to pork prices.

Live hog prices at the terminal markets were substantially higher this Friday morning than a week earlier at some markets. Prices were from $0.75 to $3.50 higher than 7 days earlier. Top prices for select markets were: Peoria $39 per cwt, St. Paul $40.50, Sioux Falls $41 and interior Missouri $40.

Feeder pig prices at United Tel-o-auction were steady to $10 per cwt higher than 2 weeks ago. Prices at United by weight groups were: 40-50 pounds $47 per cwt, 50-60 pounds $42-$61.50, 60-70 pound $41.50-$47 and 70-80 pounds $42-$57.50 per cwt. The higher priced pigs were mostly direct to direct farm sales.

As indicated in earlier weeks, we expect feeder pig prices to decline seasonally but hold well above year earlier levels in the next few months.

Even though live hog prices were higher this Friday than a week earlier, average carcass prices for 185# carcasses with 0.9-1.1 inches back fat, 6-square-inch loin, 2 inches deep were slightly lower this Friday morning than last Friday. These prices by area were: western Cornbelt $56.83 per cwt---down $0.20, eastern Cornbelt $56.92---down $0.41, Iowa-Minnesota $56.78---down $0.24 and nation $56.89---down $0.26.

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