Record slaughter causes prices to tumble

US Weekly Hog Outlook, 24th October 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.
calendar icon 25 October 2003
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Ron Plain
Ron Plain

The hopes of last week that the hog industry was receiving substantial strength in demand from the record high beef prices were dashed with the product from the record high slaughter of last week as pork products tumbled lower this week. Loins with 1/4" fat trim at $93.50 per cwt on Friday were $11.00 below seven days earlier. Boston butts with 1/4" fat trim were $22.46 per cwt lower at $57.76 per cwt, 17-20 pound hams at $56.00 per cwt down $2.50 per cwt for the week.

With the decline in pork product prices, live hog prices tumbled lower. The terminal market top live hog prices this Friday morning were $3.50 to $4.50 lower than 7 days earlier. The top live prices Friday at select markets were Peoria $32.00, St. Paul $33.50, Sioux Falls $33.00, and interior Missouri $30.25 per cwt.

The average price for a 185-pound carcass with 0.9-1.1-inch back fat, 6 square inch loin 2 inches deep was from $2.99 to $6.14 lower than a week earlier. These prices for Friday morning by area were: western Cornbelt $46.34 per cwt, eastern Cornbelt $48.90 Iowa-Minnesota $45.89 per cwt, and nation $47.88.

Slaughter continues at record high levels. Slaughter for the 4 weeks ending October 25 was estimated at 3.3 percent above a year earlier. If slaughter through the fourth quarter continues this much above last year, we will have a fourth quarter slaughter at a little larger than in the fourth quarter of 1998.

Unless demand for pork comes on strong for the remainder of the month than indicated this week, hog prices will continue to weaken as we go into November even if we do not run into slaughter capacity problems.

We still cannot rule out the possibility that we could have more hogs in coming weeks than we can slaughter on a timely basis. If we do, hog prices will be pushed even lower for at least a short time period.

We continue to be concerned about what our data indicates hog producers are doing to the size of the U.S. breeding herd. Sow slaughter in the U.S. since September 1 through the week ending October 11 has been up 0.4 percent in actual number or about 4 percent when compared to the size of the sow herd. However, when the number of sows imported from Canada is removed, sow slaughter size the first week ending in September is down 18 percent. Our gilt slaughter numbers also show less gilts in the slaughter mix for this period than a year earlier.

We believe the odds are quite high that producers have stopped the reduction in the sow herd and may be building it a little.

If we continue to slaughter hogs above last year at the rate through October to date, hog slaughter this year will be above last year in number by about 0.6 percent and pork production will probably be up over 1 percent or more for the year.

Average weights continue to rise well above last year. For the 3 weeks ending in October, live-hog weights for Iowa-Minnesota averaged 263.9 pounds --- up 4.2 pounds per head from last year. Average carcass weights for the 2 weeks ending October 11 were up 3.5 pounds for barrows and gilts from last year.

These high weights certainly do not indicate the unexpected high slaughter so far in October being due to pulling marketings forward.

Slaughter this week under Federal Inspections was estimated at 2010 thousand head --- up 2.6 percent from the same week in 2002.

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