Ron Plain

The mandatory price reporting legislation was not renewed before congress took the election recess. However, most packers are continuing to report on a voluntary basis.

For the first week of the voluntary reporting it appears about 98% of the volume that was being reported when mandatory has continued. We do not believe the report has been compromised any.

We understand the legislation will be renewed shortly after Congress reconvenes after the election recess.

This has been a good week for hog producers. Cash top hog prices this Friday were from $2.25 to 5.50 per cwt above 7 days earlier. Weighted average 185# carcass with 0.9-1.1" back fast 6 square inch loin 2" deep were from $5.95 to 7.67 higher than Friday last week.

The top cash prices live Friday morning were: Peoria $52.50 per cwt, St Paul $56.00 per cwt, Sioux Falls $56.00 and interior Missouri $49.50 per cwt.

The average prices for 185# carcass by area of the country this Friday morning were: western Cornbelt $77.11, eastern Cornbelt $72.78, Iowa-Minnesota $77.43 and Nation $75.54 per cwt.

Slaughter for the past 4 weeks was very close to a year earlier based on preliminary data. Even so, cash hog prices at the end of this week were over 50% higher than a year earlier.

Pork demand and especially live hog demand continues to be unbelievably strong.

A packer in Canada that kills 28-30 thousand hogs per week went on strike this week. How long the strike will last is certainly not known but there are some rumors it could at least be a few weeks.

We are always about two weeks behind in knowing how many live hogs we get from Canada, but the odds are high that we will likely get some larger numbers of slaughter hog imports form Canada until this strike is resolved.

As indicated above, slaughter of hogs for the past 4 weeks are at about the same level as a year earlier. This slaughter number is making the USDA market inventories in the September 1 Hogs and Pigs report look quite accurate. We hope this indicated accuracy lasts for the remainder of the year. If so slaughter for the fourth quarter will likely be down a little from last year because of 1 less slaughter day in the 4th quarter this year than in 2003.

We have a very wide differential in hog prices between the eastern and western Cornbelt. The supply of hogs for the past couple of weeks appears to be very tight in the western Cornbelt related to packers slaughter plans. A differential of $4.33 per cwt of carcasses as we had this Friday morning will not last very long because of the industries ability to move hogs from one area to another, given time.

Pork product prices ended the week mixed compared to a week earlier. Pork loins with a ¼" trim at $103.09 per cwt this Friday morning were down 1.01 per cwt, Boston butts at $81.55 were down by $0.45 per cwt 17-20# hams were up $2.18 per cwt at $81.00 per cwt, and 14-16# bellies at $96.00 per cwt were up $6.00 per cwt from a week earlier.

We believe packers are operating in the red at weeks end, therefore the probabilities are high that they will try to adjust slaughter next week enough to improve margins. Therefore prices next week are likely to weaken.

Slaughter this week under Federal Inspection was estimated at 2096 thousand head --- down 2.8% from a year earlier.