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Ron Plain

For the week ending March 6th, sow slaughter was over 20% above last year when adjusting for herd size. For the 4 weeks ending March 6th, sow slaughter was up nearly 18% from last year. And for the year through week ending March 6th, sow slaughter was up 9.3% from 12 months earlier. Gilt slaughter for the year through week ending March 6th is also a little above a year earlier.

We hope this is an indication of at least some decline in the US hog breeding herd. Remember with a 3% productive growth, the North American hog industry needs to reduce the breeding herd by 1.5% just to hold constant with demand.

Retail pork prices in February were 0.1% below January but the average price of January and February for 2004 was 3.4% above last year with between a 4 and 5% increase in daily pork production.

According to the USDA only the pork producers benefited from these higher retail prices. The retailer-processor margin for these 2 months was down 0.3% from last year and the packer's margin was down 6.1% from 12 months earlier. However, the average price for 51-52% lean hogs for these 2 months was 20.3% above the same months in 2003.

All indicators show continued very strong demand for both pork and live hogs. It appears the growth in demand at the live level for hogs is holding in the plus 8% level so far in 2004 compared to 12 months earlier.

Our estimate of the US hogs and pigs inventory for March 1st has the breeding herd at 99% of 2003 and the market herd at 102% of last year. Our estimate of the market herd if correct would indicate slaughter up 2-3% in both the 2nd and 3rd quarter of 2004 compared to 2003.

Even with this larger slaughter, if we get the normal seasonal increase from March to June this year, live hog prices will average in the low to mid 50's and carcass base prices will average in the low to mid 70's.

If these prices materialize it will be difficult to keep any reduction that may have started in the breeding herd to continue through the summer.

Cash feeder pig prices were steady to $20 per cwt above 2 weeks earlier at United Tel-O-Auction this week. The prices by weight groups at United were: 40-50# $90 per cwt, 50-60# $83-102, and 60-70# $103.50.

Pork product prices ended this week mixed. Loins with a quarter inch trim at $115.00 per cwt were up $6.00 per cwt, Boston butts with quarter inch trim at $77.00 per cwt were up $3.00 per cwt, 17-20# hams at $55.00 per cwt were down $6.67 per cwt and 14-16# bellies at $105.00 were up $1.00 compared to last Friday morning.

Producer's prices for hogs gained some for the week. Live top prices Friday morning were $2.00 to $2.50 per cwt above 7 days earlier and carcass prices were $2.24 to $2.76 per cwt above the same period last week.

The top prices for select markets on Friday morning were: Peoria $45.00 per cwt, St. Paul $47.50, Sioux Falls $ NA, and Missouri $46.50. The weighted average base price for 185# carcass with 0.9-1.1" back fat 6 sq in loin 2" deep by area were: western Cornbelt $65.36, eastern Cornbelt $65.83, Iowa-Minnesota $65.38, and nation $65.52.

Slaughter this week under Federal Inspection was estimated at 1940 thousand head-up 0.6% from the same week in 2003.