Ron Plain

It is hard to say which is more amazing. The record hog slaughter of recent days or the fast growing demand for pork. Prior to the past 3 weeks, daily hog slaughter had exceed 400,000 only twice in history. Slaughter was above 400,000 four times during the week ending September 4. Since August 27, we have recorded 10 of the 22 largest daily hog kills ever. Yet, hog prices are $3-5 higher today than they were on August 27.

Record retail pork price are funding this year's strong hog prices. The average price of pork sold in groceries stores in August was a record $2.885/pound, up 3.8 cents from the record set in July which was 1.7 cents above the previous record set in June.

Pork trade continues to go in our favor. During July, the U.S. exported 13.8% more pork than a year earlier and imported 7.1% less. Thus far in 2004, the biggest gains in exports have been to Mexico (up 118.9 million pounds), Taiwan (up 36.1 million lbs), Japan (up 32.9 million lbs), and Canada (up 27.5 million lbs). During the first 7 months of this year, exports equaled 10.6% of U.S. pork production and imports equaled 5.5% of production.

This week's federally inspected hog slaughter is estimated by USDA at 2.093 million head. That is 6.4% more than a year ago. When the last three weeks are combined, hog slaughter is up 5.6% compared to a year ago. This is more than double what was indicated by the June inventory report.

Hog prices ended this week sharply higher than last Friday and the highest in over a month. The top price Friday at St Paul was $54.50/cwt, up $5 from the previous Friday. Sioux Falls Friday top was $54/cwt. Peoria had a top of $52/cwt on Friday, up $3 for the week. Interior Missouri hogs had a $52.50 top on Friday. The national weighted average carcass price Friday morning for negotiated hogs with 0.9-1.1" backfat, 6 sq. in. loins 2" deep was $74.94/cwt, $5.88 higher than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $74.60, western corn belt $75.15, and Iowa-Minnesota $75.48/cwt.

On the Friday morning report, 1/4-inch trim loins weighing less than 21 pounds were trading at $1.24 per pound, up 8 cents from the previous Friday. Boston butts gained 3.34 cents for the week to 76.91 cents per pound on Friday. 14-16 pound pork bellies ended this week up 6.5 cents at 98.5 cents per pound. Ham prices, however, were a penny lower at 78 cents per pound on Friday for 17-20# hams.

Carcass weights have been above year-ago levels for the last 7 weeks, averaging up 2 pounds. Given strong hog prices and cheap feed, it is reasonable to expect weights to stay above year-ago levels for the rest of 2004.

The October lean hog futures contract ended the week at $72.00, up $5.95 from last Friday. The December contract settled at $68.82 today, up $4.32 cents for the week.

Next Friday USDA will release their September Hogs and Pigs Report. We believe the September 1 breeding herd was unchanged from last year and the market hog inventory was up 2%. We expect fall farrowings to be up 1% and winter farrowings to be up 2%.