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Ron Plain

There is a high probability that we are as current on marketing of hogs as we have been since December 7 of 2002. For the first time since December of 2002 the average carcass weight of barrows and gilts were 1 pound below a year earlier. For the week ending May 1 the average weights of barrows and gilts in Iowa-Minnesota were 0.3 pounds below last year. However, the live weight series fluctuations more than the carcass weights and we have had several times in the last year when live weights for Iowa-Minnesota was below 12 months earlier.

We believe there is a high probability that slaughter of hogs in coming weeks will follow this week and be below 1.9 million head under Federal Inspection for the week.

If so, and we can hold this unbelievable strong demand, hog prices in June are likely to be above May.

The futures market for lean hogs in late week supports the possibility that demand cannot hold these lofty levels. The May contract was the high and it was below the current price of negotiated carcass prices. In fact, the lean hog contract price shows declining prices for the next year. The live cattle contract futures price has had this relationship to cash fed cattle prices for some time now.

It is too early to predict with confidence, but there is a chance that we are in a period where all farm commodity prices move to a new higher level as they did in the early 1970s.

The price index for all farm commodities set a new record high in March of 2004. This record lasted for 1 month with April breaking the March record. The odds look good for May prices to be above April.

Retail pork and beef prices practically doubled from the last 5 years of the 60s until the last 5 years of the 70s. Granted we had substantially higher rates of general inflation in that period than we now have. But the odds may be high for stronger general inflation pressure in the next few years.

This has been another good week for cash hog prices. The top live prices this Friday morning were from $2.00 to $4.00 per cwt above 1 week earlier. The top live prices on Friday morning were: Peoria $53.00 per cwt, St. Paul $56.00, Sioux Falls $57.00, and interior Missouri $54.75.

The weighted average for 185 pound carcasses with 0.9-1.1" back fat, 6 sq. in. loin, 2" deep were from $4.74 to $6.10 per cwt this higher Friday morning than 7 days earlier. These prices by area for Friday morning were: western Cornbelt $76.80 per cwt, eastern Cornbelt $74.91, Iowa-Minnesota $76.82, and Nation $76.23.

Pork product prices did quite well this week. Loins with ¼" trim at noon Friday were $135.00 per cwt, up $17.20 per cwt for the week. Boston butts were up $5.96 per cwt, 17-20 pound hams were NA and 14-16 pound bellies at $121.00 per cwt were up $8.00 per cwt from 7 days earlier.

Slaughter this week under Federal Inspection was estimated at 1840 thousand head - down 1% from the same week last year.