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Sow slaughter this week up 15.6% from last year

by 5m Editor
15 May 2004, at 12:00am

US Weekly Hog Outlook, 14th May 2004 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

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Ron Plain
Ron Plain

The United States International Trade Commission voted on May 7 that there is a reasonable indication that the U.S. industry is materially injured by reason of imports of live swine from Canada that are allegedly subsidized and sold in the United States at less than fair value.

As a result of the Commission's affirmation determinants, the U.S. Department of Commerce will continue to conduct its antidumping and countervailing duty investigations of import of live swine from Canada, with its preliminary countervailing duty determinants due on or about June 11, 2004, unless extended, and its preliminary antidumping determinants due on or about August 25, 2004, unless extended.

Pork exports in March at an equivalent of 198.9 million pounds carcass weight was a record high for the month. The growth from a year earlier was almost 37%. The drivers in the big growth was Mexico up 110%, Canada up nearly 29% and Japan up 9%. There was also a healthy 68% growth in the groups of countries lumped into the category of "other".

This very healthy growth in pork exports to Mexico started before our beef exports to Mexico were banned because of the one cow found with BSE in Washington state. Pork exports to Mexico were up 50% in November up 55 in December, up 78 in January, up 76 in February and then bounced up to 110% in March as compared to a year earlier for all months listed.

There is a possibility that whatever is driving the strong demand in the U.S is also impacting our neighbor to the south.

The flow of live hogs from Canada into the U.S. continued at a growth of 44% in March compared to a year earlier. For January-March; the U.S. has imported 47% more hogs from Canada than in the same months of 2003.

Feeder pig imports for these three months were up 34.5% and slaughter hog imports were up nearly 79% compared to twelve months earlier.

The increase in slaughter hog imports from Canada in the first quarter of 2004 amounted to 1.3 percentage points of our slaughter increase or 30% of the 4.3% growth in our total slaughter.

Sow slaughter for the week ending May 1 was up 15.6% from last year when adjusted for breeding herd size. This was the second consecutive week for an increase of near 15% from a year earlier. Gilt slaughter is down a little from last year for the year but is still above the level needed to maintain a constant herd size. These data indicate we are reducing the breeding herd at some rate.

Here we are with live hog prices in the upper 50's on a live weight basis and at that the breeding herd is being reduced at least a slow rate. One possibility of why this reduction appears to be continuing with a profitable hog price is the high priced feed grain. In the past, we have reduced hog production with high priced corn. We have corn production as an important commodity on most of the farms that provide about 40% of the hogs.

This has been another good week as to cash hog prices. The live-priced markets this Friday morning were from $3 to 5 per cwt higher than a week earlier.

The markets with live prices had a high on Friday morning of: Peoria $58 per cwt, St.Paul $60, Sioux Falls $60.50 and interior Missouri $57.75. The average weighted price for 185 pound carcasses with 0.9-0.11 inch back fat, 6 square inch loin 2 inches deep by area were: western Cornbelt $50.81 per cwt, eastern Cornbelt $80.55, Iowa-Minnesota $80.27, and nation $80.29.

Cash feeder pig prices this week at United Tel-O-Auction were mixed from two weeks earlier. The lightweight pigs were lower but the 60-70 pound pigs were $3-4 per cwt higher than 14 days earlier. These prices at United by weight groups were: 40-50 pounds $87-91 per cwt, 50-60 pounds $83-88.50 and 60-70 pounds $74.50-87.50.

Slaughter this week under Federal Inspection was estimated at 1826 thousand head ---up 1.1% from a year earlier.

The futures market continues to expect the current strong demand for pork to weaken as we go into summer. The May lean-hog contract was the highest priced contract for the next year outpacing June by over $6 per cwt in late week. We doubt this will occur with the actual price when we get to June.

5m Editor