Live hog prices in October were nearly 22% above 12 months earlier

US Weekly Hog Outlook, 21st November 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.
calendar icon 22 November 2003
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Ron Plain
Ron Plain

Retail pork prices in October followed the normal trend with a decline of nearly 1% from September. However, October prices this year were up a short 4% from October of 2002.

For the first 10 months of 2003 retail pork prices were still down 0.7% from the same months in 2002.

The good news is that live hog prices in October were nearly 22% above 12 months earlier. For the first 10 months of 2003 live hog prices were up nearly 13% from a year earlier.

All of the increases in prices for January to October for live hogs came from squeezed marketing margins. The total marketing margin for pork for January to October was down 5.2% from last year with most of the decline coming from the processor and retailer margins.

We did receive some demand help from the record high beef prices in October. With pork production in October up between 3% and 4%, October live hog prices were up nearly 22% from the same month in 2002.

There is no evidence that pork retailers are holding up pork prices to provide a good margin to offset the weak margins for beef. In October, the retailer-processor margin was down slightly from a year earlier and the margin for the processor-retailer for January to October was down 5.5% from the same months in 2002.

Sow slaughter in total continues to run below last year. For the week ending November 8 domestic sow slaughter was over 25% below a year earlier based on the weekly live hog import data.

There continues to be reports that there are errors in the identification of hogs by slaughter class being imported from Canada, we certainly hope so, otherwise the evidence is strong that producers are building the US breeding herd.

If US producers are building the sow herd, I certainly have no logical reason why they are doing so. Certainly hog prices in 2002 and 2003 have been at a level that should have provided an incentive to reduce the herd.

We continue to hope the import data has errors and believe there is a realistic possibility there are errors because we know of no major movement to build the breeding herd.

Since the first of September, domestic sow slaughter has been over 89 thousand head below last year based on the available data. If this value is correct, it amounts to over 1.5% of the US breeding herd on September 1. We certainly hope and pray this data is not correct.

Pork exports for September this year were up over 7% from last year. For January to September pork exports were up nearly 9%. The probabilities now appear to be near 100% that 2003 will be the 12th consecutive year for record high pork exports.

The bad news for hog prices is that our pork imports were up a little over 15% for January to September.

Live hog imports continue to run well above last year with the total number imported for January to September up a little over 25%. Feeder pig imports were up over 34% and slaughter hog imports were up nearly 9%. At the rate of import of live hogs through September, we will import over 7 million live hogs from Canada this year.

Hog slaughter continues to run above expectations. This week slaughter under Federal Inspection was estimated at 2141 thousand head --- up 4.4% from the same week last year.

The good news is that even with this big slaughter, cash hog prices were steady to higher on Friday than a week earlier. Top live prices this Friday morning were from steady to $1.00 higher compared to a week earlier. The average carcass prices were from $0.12 to $2.76 higher compared to Friday morning last week.

Top live prices for select markets this Friday morning were: Peoria $32, St. Paul $34.50, Sioux Falls $36 and interior Missouri $31.

The average prices for 185 pound carcasses with 0.9-1.1 inch back fat with 6 square inch loin 2 inches deep by area were: Western Cornbelt $47.37, Eastern Cornbelt $45.68, Iowa to Minnesota $47.22 and Nation $46.60.

There will be no report next week due to the Thanksgiving holiday. Have a happy Thanksgiving!

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