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Ron Plain

Cash hog prices rallied in the early week, but faltered in the late week as higher live prices and some weakening in some pork product prices squeezed packer margins. However, the net result was a bit stronger hog prices this Friday than a week earlier.

The top live prices were $1.50 to $2.00 higher from a week earlier on Friday morning. These top live prices for select markets were: Peoria $45.50 per cwt, St. Paul $47.00, Sioux Falls $N.A. and interior Missouri $46.50.

The weighted average price for 185# carcasses with 0.9-1.1" back fat, 6 sq. inch loin 2" deep were from $1.65 to $2.99 per cwt higher compared to a week earlier. These carcass prices by area were: western Cornbelt $66.48 per cwt, eastern Cornbelt $66.18, Iowa-Minnesota $66.52 and nation $66.27.

As indicated earlier, pork product prices were mixed for the week. Loins with a quarter-inch trim at $112.50 per cwt were down $6.75 per cwt from 7 days earlier on Friday morning. The other product prices were: Boston butts with a quarter-inch trim at $56.00--down $7.00 per cwt, 17-20# hams at $56.00--up $7.00 per cwt and 14-16# bellies at $110.00 per cwt--up $8.00 per cwt for the week.

Demand for pork as well as chicken and beef continue to be very strong with substantial growth from a year earlier, which is very unusual.

Gilt and sow slaughter data continue to support the belief that US producers are reducing the hog breeding herd at a relatively slow rate. However, we doubt the breeding herd is being reduced enough to offset productivity growth and maybe some growth in the Canadian herd.

Total cold storage stocks of pork on March 31 were down 6% from the end of February and down 14% from the end of March 2003. Belly stocks at the end of March were down 10% from the end of February; and ham stocks declined 25% for the month, which contributed to the 6 % counter seasonal move of pork cold storage stocks.

Beef cold storage stocks were up 4% at the end of March compared to a year earlier, but total chicken stocks were down 7% for the year. Total meat cold storage stocks continue to be supportive to meat prices.

The 3.2% increase in retail pork prices was all bid into live hog prices for the first quarter of 2004. The total marketing margin for January-March this year was down 3.2% from 12 months earlier. The processor-retail margin was down 2.3% and the packer margin was down 6.9% from a year earlier.

The combination of 3.2% higher retail pork prices and 3.2% narrower marketing margins resulted in nearly a 25% increase in prices for live hogs for the first quarter of 2004 compared to a year earlier.

Slaughter this week under Federal Inspection was estimated at 1946 thousand head --- up 4.6% from a year earlier.