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Demand at consumer and live level holds strong for pork and hogs

by 5m Editor
28 August 2004, at 12:00am

US Weekly Hog Outlook, 27th August 2004 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

Ron Plain
Ron Plain

The demand at both the consumer and live level holds very strong for pork and hogs. The demand index we keep shows consumer demand for pork for January-July was up 3.1% midpoint estimate from a year earlier. Due to higher retail prices and narrower marketing margins the live hog demand index shows an 11.4% increase at our midpoint estimate from a year earlier.

Most everyone keeps wondering whether this strong demand for all meat is sustainable. We doubt it is at current levels but hopefully it will last several years at some level.

The demand for beef at the consumer level for the first seven months of 2004 was up 7.7%, the consumer demand for broilers was up 3.6% and turkey demand was up 1.0% for this period compared to twelve months earlier.

Cold storage stocks at the end of July continue to very positive for pork. The total pork stocks on July 31 were down 16% from a year earlier. Ham stocks were down 30%, bellies were down 27%, loins down 15%, and butts were down 44%.

Slaughter continues to run quite large. This week slaughter under Federal Inspection was estimated at 1996 thousand head --- up 4.1% from a year earlier.

With this record or near record high slaughter level, prices were pushed a bit lower this week for hogs. Even with these lower prices, the strong demand is holding prices sharply higher than a year earlier. This Friday morning prices were from 45-52% higher than 12 months earlier even with 4% larger slaughter this week than this week last year.

Wholesale pork prices are holding quite strong with the big supplies. Loins with a ¼" trim at $118.27 per cwt Friday morning were up $3.72 per cwt from a week earlier, Boston butts with a ¼" trim were down $4.00 per cwt at $87.00, 17-20# hams were up $0.70 at $78.50 per cwt, and 14-16# bellies were down $5.00 per cwt at $90.00.

Independent hog producers are working together to gain some of the economies in large scale hog production through networking activities.

The percent of producers producing less than 50,000 head of hogs annually in networking activities almost doubled from 2000 to 2003 based on the hog structure study this year by the University of Missouri and Iowa State University. Purchasing of imputs increased from 7% of the producers to 18% in 2003, feed milling increased from 4% to 13%, hog marketing increased from 15% to 32%, information sharing increased from 7% to 18%, genetic access increased from 4% to 11%, farrow-to-finish increased from 6% to 8%, and feeder-to-weaner pig production increased from 7% to 17%.

Cash hog prices live this Friday were $0.75 to 2.00 below a week earlier. These top prices for select markets were: Peoria $48.00, St. Paul $51.00, Sioux Falls N/A, and interior Missouri $48.75.

Average prices for 185# carcasses with 0.9-1.1-inches of back fat, 6-square-inch loin 2 inches deep by areas were down $1.90 to 3.25. These prices for Friday morning were: western Cornbelt $69.75 per cwt, eastern Cornbelt $69.64 per cwt, Iowa-Minnesota $69.67 per cwt, and nation $69.70 per cwt.

5m Editor