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Ron Plain

Hog slaughter this week moved back up relatively close to 2 million head under Federal Inspection. With this many hogs, prices were under pressure all week.

Top live prices this Friday morning were $0.75 to $3.00 below a week earlier. These top prices for select markets were: Peoria $39.00 per cwt live, St. Paul $ NA, Sioux Falls $ NA, and interior Missouri $43.00.

The weighted average price for 185# carcasses with 0.9-1.1" back fat 6 sq in loin 2" deep were from $1.23 to $3.98 per cwt below last week. These prices by area were: western Cornbelt $60.24 per cwt, eastern Cornbelt $59.91 per cwt, Iowa-Minnesota $60.22 and nation $60.19.

Pork product prices were mixed for the week. Loins with a ¼" trim at $113.33 per cwt this Friday were up $1.33 per cwt from 7 days earlier. Boston butts with a ¼" trim were up $2.50 per cwt from last Friday. 17-20# hams were down $2.00 per cwt at $49.00 per cwt. 14-16# bellies continue to be the highest price major cut at $114.00 per cwt, the same as a week earlier.

The futures market has not been as desirable for producers in 2004 as in 2003. In late March, the net price producers received for hogs priced under a contract tied to the futures market was about $8 per cwt in carcass below the net price received for hogs sold on the spot market.

The long time result of producers using the futures market has been a lower price on average than the spot or non-hedged hogs.

Sow slaughter continues to run above a year earlier. For the week ending March 27, sow slaughter was over 12% above a year earlier after adjusting for herd size. For the 4 weeks ending March 27, sow slaughter was 12.6% above a year earlier; and for the year through week ending March 27, sow slaughter was up 9.5% after adjusting for herd size.

For February and March, gilt slaughter has been 0.5% above a year earlier. This data suggests producers may have been reducing the breeding herd at a relatively slow rate during February and March.

We need to be reducing the breeding herd about 2% a year to hold pork production in line with long time demand growth.

Productivity growth in the U.S. breeding herd has averaged 3.3% for the 5 years ending the end of February 2004.

Even with the very desirable demand situation the hog industry has enjoyed so far in 2004, the long time demand growth is not likely to exceed the 1.5% growth of the past few decades.

Slaughter this week at 1973 thousand head was up 3.7% from a year earlier.