Week on week slaughter down 4% from last year

US Weekly Hog Outlook, 12th September 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.
calendar icon 13 September 2003
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Ron Plain
Ron Plain

We appear to finally get some cross pull on demand for pork from the record high beef prices. Certainly in many peoples opinion $120.00 per cwt 1/4" trim pork loins are still a real bargain with yield 3 choice box beef at $159.00 per cwt. Lets hope this lasts.

If we can continue to get help from beef as to demand for pork we have a chance for 51-52% lean hogs to be close to $40 per cwt live during the 4th quarter.

A big unknown continues to be how large slaughter will be for the 4th quarter. Slaughter for the 3rd quarter looks like it will be only about 1% above our estimate based on the June hogs and pigs when we account for the extra slaughter hogs imported from Canada. The extra imports from Canada during July accounted to about 1.1% of our slaughter and during August only 1.5% of U.S. slaughter. Also uncertain is how large our slaughter hog imports from Canada during the 4th quarter will be.

Will the Spring Hill slaughter plant in Manitoba reopen this fall? In some people's, opinion the odds favor a no answer. Their reasoning is that they have been closed long enough for their labor force to have moved to something else as a job. Certainly maintaining a labor force is a challenge for hog slaughter plants in both the U.S. and Canada.

We still doubt we have pulled as many hog marketings forward in the 3rd quarter of 2003 as a year earlier.

If slaughter holds as close to expectations based on the June hogs and pigs as we believe they have from domestic supplies and we continue to get the larger number of slaughter hogs from Canada, there is a good chance for hog slaughter in the U.S. to be close to the 2002 level for the 4th quarter.

If this happens, we will have to have a tremendous surge in pork demand to get the price now indicated by the futures market for October and December.

Sow slaughter from the domestic U.S. herd in June-August was down over 11% in actual number from a year earlier. When one adjusts the slaughter to herd size it was still down over 6% from 12 months earlier. Gilt slaughter for this period was also down from a year earlier.

Our first effort to estimate the size of the U.S. breeding herd for September 1st is disappointing. The number sill shows a smaller herd than a year ago, but larger relative to September 2002 than the June 2003 herd was compared to 12 months earlier.

We believe the odds are very high for the herd on September 1st to be down around 3% from last year when we get USDA numbers on September 26th.

Our data shows the herd down less than 3%.

Slaughter this week under Federal Inspections at 1962 thousand head was down 4% from last year. The slaughter this week was relatively close to the 1968 thousand average for this week for 1999-2001.

We expect slaughter to be about 5% below 2002 for September this year.

Pork product prices and especially loins showed substantive strength this week which is the major reason for the good rally in hog prices. Loin prices for 1/4" trim loins at noon Friday were $120 per cwt - up $17.50 per cwt for the week. Boston Butts with 1/4" trim were $79 per cwt also showed good strength with an increase of $9.75 per cwt, 14-20# hams were up a bit at $59.50 per cwt and bellies were also up $2 per cwt at $82 per cwt. Live hog prices showed one of their bigger weekly rallies with top live price this Friday up $6 to $7.50 per cwt from 7 days earlier.

Average carcass prices for the 185# carcass with 0.9-1.1" backfat 6 sq. inch loin 2" deep were up $7.35 to $7.68 per cwt by area. Their prices for Friday morning were; Western Cornbelt $56.14, Eastern Cornbelt $56.87, Iowa-Minnesota $56.69, and national $56.55.

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