Ron Plain

Hog slaughter estimated at 2,008 thousand head under Federal Inspection was below a year earlier for the first time this year in a week not influenced by a holiday. The prior four weeks to this week, Federal Inspected slaughter was above 2 million head. This is the first time of record to have 5 weeks above 2 million head slaughtered under Federal Inspection in the first half of the year.

Hopefully, the decline in slaughter this week is the beginning of the usual seasonal decline in the number of hogs available for slaughter.

Slaughter weights continue to decline. The average live weight for the week ending February 4 for barrows and gilts in Iowa and Minnesota was down 0.4 pounds from a week earlier, but up 2.9 pounds from a year earlier at 270.7 pound average per head.

The percentages of hogs priced on the negotiated or spot market is leveling out. However, there was still some decline between January of 2005 and January of 2006. The percentage decline in the last year was 3.8%. This compares with an 8.6% decline from 2004 to 2005, a 14.1% decline from 2003 to 2004 and a 19.2% decline from 2002 to 2003.

In January this year, 41.8% of the barrows and gilts included in the marketing price reporting system, which is voluntary at the current time because Congress still has not agreed on legislation to continue the mandatory program was tied to the spot market of hogs or meat.

Based on preliminary data 8,030,370 hogs were slaughtered under Federal Inspection for January 1 through 28, 2006. Data for 7,261,064 head (90.4% of the Federally Inspected slaughter) are included in the price reporting data.

This year, 41.8% of the hogs were purchased on a hog or meat market formula, 8.8% on as other market formula (contracts tied to futures market) 16.6% on the other purchase arranged (contracts tied to feed or a window type), 2.6% packer sold, 20.1% packer-owned and 10.2% spot or negotiated. Hopefully, we will stabilize the spot market near 10% which we believe is enough to give a price that is consistent with the current supply and demand situation. If so, the live negotiated market can continue to be the base to tie marketing contracts to.

Packers had to chase hogs this week to get slaughter as large as it was even though slaughter was below a year earlier. Live prices this Friday morning were $3.50 to 6.50 higher than seven days earlier. These live prices for select markets this Friday morning were: Peoria $40.00 per cwt, St. Paul $41.50 per cwt, Sioux Falls $42.50 per cwt, and interior Missouri $40.25 per cwt.

Average weighted carcass price by areas were $3.32 to $7.11 higher this Friday morning than a week earlier. The average weighted base carcass price this Friday morning by area were: western Cornbelt $58.72 per cwt, eastern Cornbelt $55.25 per cwt, Iowa-Minnesota $58.67 per cwt, and nation $57.15 per cwt.

Slaughter this week at 2,008 thousand head under Federal Inspection was down 0.6% from a year earlier.