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Ron Plain

Sioux Falls reported a top price today of $60/cwt for barrows and gilts. This was the first time one of the terminal markets has reported $60 hogs since July 23, 1997. This year's fabulous hog prices are demand driven. Commercial hog slaughter during the first four months of 2004 totaled 34.38 million head, 0.8% more than in January-April 1999, which was the previous record holder for hog slaughter during the first third of a year. During the first 19 weeks of 2004, we've slaughtered 3.2% more hogs than during the same period last year and seen hog prices that are 28.4% higher than a year ago.

The strong demand is coming partially from the export market but mostly from the domestic market. It appears that the popularity of high protein diets have increased consumers demand for pork, beef and chicken.

Most likely, hog prices will move even higher. The most important indicator of higher hog prices is that the cutout value is also rising fast. This afternoon's USDA estimate of carcass cutout value was $82.82/cwt. That's high enough to justify paying $60/cwt for live hogs.

Producers appear to be very current on marketings. The average carcass weight for barrows and gilts slaughtered the week ending April 24 was 1 pound lighter than a year ago. This was the first time that dressed weights were below year-earlier levels since the week ending on December 7, 2002.

Seasonally, both hog slaughter and dressed weights should decline as we move into summer. Dressed weights are usually lightest in August and average daily kill is usually lowest during July.

How high will prices get? The peak for live hog prices at the terminal markets in 1997 was $62.75/cwt. The 1996 peak was $65.50. At this point, the odds appear good that cash prices will approach these levels within the next few weeks.