Ron Plain

The July 1 cattle inventory was down slightly from a year earlier. The number of heifers being held for beef cow replacement on July 1 was up 4 percent from last year.

Missouri beef cow and heifer number that have calved was up 8 percent from a year earlier.

The odds appear high that cow calf producers have started to build the cow herd.

Progress appears to have been made with Japan in the past 2 weeks that it is not a wise policy to test all slaughter cattle for BSE. There is now hope that Japan will start importing beef from the U.S. in the next several weeks. Is so, this will support strong cattle prices.

If producers do build the cattle herd, this will reduce slaughter and support prices.

Because beef appeared to lead in the development of the unbelievably strong meat demand, the longer beef prices stay high the more positive it will be for pork prices.

Hog prices ended July on a strong note. Prices for live hogs this Friday morning were from steady to $2.25 higher than a week earlier. These top live prices this Friday morning were: Peoria $54, St. Paul $57, Sioux Falls $57.50 and interior Missouri $54.75.

The weighted average price for 185# carcass with 0.9-1.1" back fat, 6 sq inch loin 2" deep was from $0.20 higher to 2.30 lower compared to Friday last week. The carcass prices by area on Friday morning were: western Cornbelt $75.48, eastern Cornbelt $75.73, Iowa-Minnesota $75.43 and nation $75.62.

These stronger hog prices were supported by stronger pork product prices. Loins with 0.25" trim at $120 per cwt this Friday were up $4.00 per cwt from last week. Boston butts with a 0.25" trim were up $10.30 per cwt at $99.50 this Friday. 17-20 pound hams were up $1 $78.00 per cwt and 14-16 pound bellies were same as a week earlier at $115.00 per cwt.

Based on data from a hog structure study by the University of Missouri and Iowa State University, hog market contracts continue to be popular with hog producers. Especially those producers with a contract. Most producers believe they were treated fairly under their contract and plan to renew the current contract when it expires.

One surprise to us from the study was the number of hogs sold on a formula type contract tied to pork product prices. Based on this study, about 5.5 million hogs were priced on this type of contract in 2003. Market contracts tied to the lean hog futures price were also used on about 6.3 million hogs last year.

Several hogs were sold using a contract tied to feed price and or a window type contract with a ledger. This number was about 4.4 million head. Nearly 11 million head of hogs in 2003 were priced on a formula type contract tied to feed and or window with no ledger. The complete report on the hog structure study can be found on this website within the next week or so: http://agebb.missouri.edu/mkt/index.htm

Hog slaughter continues to run above expectations. The estimated slaughter under Federal Inspection with week was 1896 thousand head - up 4.6 percent from last year.