ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

Productivity growth in the US is alive and well

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

US Weekly Hog Outlook, 1st October 2004 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

Ron Plain
Ron Plain

We now have some question about the size of the US Breeding herd. 77% of the increase in the size of the breeding herd on September 1 was in North Carolina. We have talked to several people in North Carolina and they do not know who has increased the herd size by 50 thousand head. Apparently in North Carolina the breeding herd is rounded to the nearest 50 thousand head. If so the increase may only be a few thousand head.

This actual smaller growth if true may be the reason the farrowing intentions for the 4th quarter of 2004 and the 1st quarter of 2005 are only up 1%. Productivity growth for number of litters per animal in the breeding herd has increased an average of 1.8% annually for the last 5 years. Therefore, with the farrowing intentions only being up as much as the size of the breeding herd a red flag has been raised.

As indicated above productivity growth in the US is alive and well. The average growth in the past 5 years has been 3.3% for the year ending August 31.

We still hope the market inventories for 60-180# pigs as reported by the USDA is the correct number. If so, and the current strong live hog demand can be maintained, hog prices will hold very strong throughout the remainder of 2004.

However, a conservative person will probably plan on slaughter being up 1-2% in the 4th quarter rather than being down some compared to 2003. Even with the larger numbers and no change in demand, prices for the 4th quarter should in the mid to upper 40s per cwt at the terminal markets. US basis 51-52% hogs are $2-3 per cwt above the terminal markets on average.

For January - August live hog demand was up nearly 12% from 2003 and consumer demand for pork was up over 3%. All of the 5% increases in retail prices was bid into live prices.

There is a report out that Brazil found foot and mouth disease in at least 1 hog herd. If this is true, it will be positive for export of pork potential for the US and Canada.

The estimated slaughter weights of barrows and gilts for the week of September 25th declined by 1.6# per head from a week earlier. This is very unusual for weights to decline at this time of the year. If these weights are accurate---the weights are a estimate from a sample---the probabilities are good that marketings in late September were pulled forward. If we have pulled marketings forward in the last 2 to 3 weeks the actual increase in the supply of hogs may be some less than indicated by slaughter.

Hog prices did come under pressure this week with terminal market prices $2.00 to $5.00 lower this Friday than 7 days earlier. The top prices at these markets this Friday morning were: Peoria $53.00, St. Paul $55.00, Sioux Falls $54.50 and interior Missouri $53.25.

The average weighted price for 185# carcass with 0.9 - 1.1" back fat, 6 square inch loin 2" deep were from $0.31 to $2.35 per cwt lower this Friday morning that a week earlier. The carcass prices by area were: western Cornbelt $78.15 per cwt, eastern Cornbelt $76.86 per cwt, Iowa-Minnesota $78.20 per cwt and Nation $77.87 per cwt.

Cash feeder pigs at United Tel-o-Auction this week were steady to $10 per cwt stronger than 2 weeks ago. The United prices by weight groups were: 40-50# $91-107 per cwt, 50-60# $88.50-92.50, 60-70# $86.50-91 and 70-80# $87.50.

Slaughter this week under Federal Inspection was estimated at 2070 thousand head---up 0.9% from a year earlier.

5m Editor