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Ron Plain

Cash hog prices were mixed this Friday compared to a week earlier. Live prices this Friday were steady to $1 lower than last week. These top prices for this Friday morning at select markets were: Peoria $36.50 per cwt, St. Paul $40.50, Sioux Falls $41 and interior Missouri $38.50.

Dressed prices for a 185# carcass with 0.9-1.1-inch-back fat, 6-square-inch loin 2 inches deep for Friday morning by area were: western Corbelt $55.34 per cwt, eastern Cornbelt $56.22, Iowa-Minnesota $55.57 and nation $55.82. These prices were from $0.49 lower to $2.37 higher compared to 7 days earlier.

Pork product prices were also mixed for the week. Pork loins with a quarter-inch trim Friday morning were $113.75 per cwt --- down $6.75 for the week. Boston butts with a quarter inch trim at $113.75 per cwt were down $12.75 from last Friday. Bellies weighing 14-16 pounds were up $6.50 per cwt with a Friday price of $84.00 per cwt. Hams weighing 17-20 pounds were also up by $8.00 per cwt with a noon Friday price at $49.00 per cwt.

Demand for pork at the consumer level did not get back to year-earlier levels for 2003 based on preliminary data. Our demand index for the consumer level shows a decline of 1.4% for 2003 compared to 2002.

Also, good news for last year was a growth of about 4.6% for demand for live hogs compared to a year earlier. Live hog prices for 51-52% lean in 2003 were over 13% higher than 12 months earlier. This was with a 1.3% increase in production.

The bad news is that we believe the probabilities are very high that pork production for 2004 will likely be around 2% above 2003. We are updating the hog structure study of the U.S. that was last updated in 2001. Based on preliminary results from producers that marketed above one third of the hogs from domestic production last year, the above estimate of growth is highly likely.

It will likely be a challenge to get hog prices near 2003 levels if we do get a 2% increase in pork production this year from last year.

Hog slaughter this week was down 5.7% from last week and close to a year earlier for the first week this year. One of the reasons for the smaller slaughter this week was a winter storm on the east coast that disrupted slaughter in early weeks. The odds are probably quite high that slaughter next week will be above this week.

Hog slaughter under Federal Inspection was estimated at 1,921 thousand head --- up 0.8% from a year earlier.

Hog weights continue to run above last year in Iowa-Minnesota. Weights for barrows and gilts for the week ending January 24 were 1.6 pounds per head above a year earlier. However, barrow and gilt weights dressed under Federal Inspection were the same as a year earlier for the week ending January 17.

We expect weights of hogs in 2004 to be above 2003, but the growth is likely to be less than a year earlier.