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Ron Plain

Cash hog prices held quite steady this week with continued large slaughter. Slaughter this week under Federal Inspection was estimated at 2147 thousand head --- up 6.4% from the same weeks last year.

Slaughter hog imports from Canada continue to run about 1.5% above a year earlier. The weekly import data continues to show cull sow and boar imports from Canada about double last year for the most recent weeks.

We now believe the probabilities are near 100% that the cull sow and boar import data is faulty. The current data indicates Canada would be culling at a rate to slaughter above 85% of their herd in a year based on the past 3 months data. Therefore, we are favoring going with an estimate of the U.S. breeding herd being down about 2% on December 1 compared to a year earlier. With the imports of cull sows and boar at the rate reported in the weekly release we show the breeding herd down only about 0.5%, but as indicated earlier we are convinced this is bad data.

Based on some trade reports the Canadian hog producers could be avoiding a marketing fee by declaring barrow and gilts as cull breeding animals. However, this was the situation last year why they would mislabel this year and did not in 2002 is not clear. The Canadian dollar is substantially stronger to the U.S. dollar now than a year earlier. The Canadian hog market is tied to the U.S. market. Therefore, a stronger Canadian dollar to the U.S. dollar means a lower hog price for the Canadians. So maybe the Canadian hog producers are stressed more and looking for any way to limit the losses.

Even though the price of hogs held quit steady this week packer margins were squeezed based on trade reports.

Live prices this Friday were steady to $1.50 per cwt higher compared to Friday morning last week. Top live prices this Friday morning for select markets were: Peoria: $32, St. Paul $35, Sioux Falls $35, and interior Missouri $31. The average price for 185 pound carcasses with 0.9-1.1 inch back fat, 6 square inch loin 2 inches deep by are was: Western Cornbelt $47.86, Eastern Cornbelt $46.19, Iowa-Minnesota $47.96 and Nation $47.03. These prices were from $0.70 per cwt higher to $1.83 lower compared to a week earlier.

Feeder pig prices this week at United Tel-o-auction were about steady with the last sale. These prices by weight groups were 40-50 pounds $60-73 per cwt, 50-60 pounds $46-68, 60-70 pounds $55.50-65.50, 70-80 pounds $46.50-55.00 and 80 pounds plus $41-43.