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Ron Plain

Cash hog prices held quote steady this week with large slaughter. Cash live prices this Friday morning were from steady to $2 per cwt higher compared to 7 days earlier. Prices for 185# carcasses with 0.9 - 1.1" back fat, 6-square-inch loin 2 inches deep weighted average for Friday morning were from $0.27 lower to $1.49 higher compared to Friday a week earlier.

The top prices live Friday morning at selected markets were: Peoria $50 per cwt and interior Missouri $48.75. St Paul and Sioux Falls did not report this Friday. The weighted average for 185# carcasses by area were: western Cornbelt $70.65 per cwt, eastern Cornbelt $69.40 per cwt, Iowa Minnesota $71.13 per cwt and nation $69.91 per cwt.

Cash feeder pig prices this week at United Tel-o-auction were strong to steady with two weeks earlier. The prices by weighted groups at United were: 40-50# $97 per cwt, 50-60# $94 per cwt and 60-70# $82.50-$91 per cwt. Feeder pig prices are expected to continue very strong compared to a year earlier for the remainder of the year.

Corn and soybeans are still very important commodities on hog farms producing less than 50,000 head annually in the United States based on the hog structure study made this year by the University of Missouri and Iowa State University. Of producers marketing between 1 and 3 thousand head annually, 94% of the farms produced corn and 90% produced soybeans. Of the producers who marketed 3-5 thousand annually, 90% produced corn and 89% soybeans. Of the producers marketing 5-10 thousand annually, 84% produced corn and 80% produced soybeans. Of producers marketing 10-50 thousand annually, 73% produced corn and 68% produced soybeans.

Wheat was also produced on 24% to 30% of these farms, dairy/milk on 2-5%, beef cow/calf on 16-27%, beef stockers on 5-7% and beef fed cattle on 16-23% of the farms.

Corn was the other commodity considered most important on these hog farms ranging from 50-61% of the farms. This data supports the belief that most of the hog farms producing 1-50 thousand head annually are located in the Cornbelt.

We still believe that a 500 sow, well managed hog farm, with corn and the complimentary relationship between hogs and corn production can compete with any size hog producer in the US. Even though the share of the US industry declined by 8% of production from 2000-2003, 39% of the hogs were purchased by this size of producers. Total hog and pigs marketed by the 1-50 thousand size producers in 2003 amounted to 48 million head.

A near normal seasonal decline in hog prices is expected this fall. For the last 5 years cash prices for 51-52% lean hog US loins have declined by $9.42 per cwt from the July average to the November average. The July price this year for 51-52% lean hogs averaged $56.71. We believe the odds are good for November this year to average in the mid $40's.

Slaughter this week under Federal Inspection was estimated at 2046 thousand head--not comparable to last year because we celebrated the Labor Day holiday this week in 2003.