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Live top hog prices down on last week

by 5m Editor
9 October 2004, at 12:00am

US Weekly Hog Outlook, 8th October 2004 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

Ron Plain
Ron Plain

Cash hog prices came under pressure this week as packers reduced kills in an effort to improve their margin.

Live top hog prices this Friday morning were $3.00 to $5.00 per cwt lower than 7 days earlier. The Friday morning top live prices by markets were: Peoria $50.00 per cwt, St. Paul $50.00 per cwt, Sioux Falls $50.00 per cwt and interior Missouri $50.25 per cwt.

Prices for 185# carcass with 0.9-1.1" back fat 6 square inch loin 2" deep this Friday morning were from $5.09 to $7.35 per cwt lower than a week earlier. The weighted average prices for these carcasses by area were: western Cornbelt $71.17 per cwt, eastern Cornbelt $71.77 per cwt, Iowa-Minnesota $70.85 per cwt and Nation $71.41 per cwt.

Even with the decline of the last two weeks we still are in excellent condition price wise with roughly 1/3 of October history. In January if someone would have told us that by October we would have slaughtered over 3% more hogs than in 2003 and still have an average of over $50 per cwt live at the live markets and in 70's carcass prices per cwt during the 1st full week of October, we probably would have asked them what they were smoking.

The data continues to be mixed as to how current we are with marketing of hogs. The average weights of barrows and gilts in Iowa-Minnesota were only 0.1# heavier for the week ending October 2nd, than a year earlier. However, the average carcass weight for barrows and gilts under Federal Inspection for the week ending September 25th was still 2# per cwt heavier than the same week in 2003.

We hope some of the overrun in hog slaughter during the last several weeks has been due to marketings being pulled forward. However, the probabilities may not be very good for this to be the situation we are in.

Slaughter for the week ending October 2nd was only up 0.9% from a year earlier based on preliminary data and this week slaughter was down 3.3% from a year earlier at 2005 thousand head. But the major reason for this decline in slaughter relative to last year may be due more to packers reducing their kill in an effort to improve margins rather than the supply of hogs available. Trade reports are that the supply of market ready hogs is larger than indicated, especially by this kill rate.

Now is not a good time to delay marketings for we are already close to slaughter capacity with slaughter levels of the last several weeks.

Even though we have had lower prices for live hogs during the last two weeks we still have no data indicating the demand has weakened for pork.

Wholesale pork prices were mixed this Friday morning compared to a week earlier. Loins with ¼" trim at $113.56 per cwt down $6.91 per cwt, boston butts with ¼" trim were down $6.49 per cwt at $81.03 per cwt, 14-16# bellies were up $6.00 per cwt at $96.00 per cwt and 17-20# down hams at $82.00 per cwt were up $5.00 per cwt.

We continue to hope that the September Hogs and Pigs report was correct as to supply of market hogs for the next few months and the supply will be same to a little below a year earlier but do not believe the probabilities are high for this to occur.

We expect hog prices to continue under pressure for the next couple of months.

5m Editor