Hog Slaughter Up On Last Week

US Weekly Hog Outlook, 4th March 2006 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 4 March 2006
clock icon 4 minute read
Ron Plain
Ron Plain

Hog prices dropped early in the week but rebounded on Friday to end the week slightly higher in the west than seven days earlier, but $1.50/cwt or so lower in the east. The top price Friday at St Paul was $43/cwt. Peoria's top was $40. Interior Missouri hogs topped out at $41.75 on Friday, up 75 cents for the week. The national weighted average carcass price Friday morning for negotiated hogs was $60.05/cwt, $1.01 lower than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $59.90, western corn belt $60.73, and Iowa-Minnesota $60.98/cwt.

This week's prices are above the live hog breakeven price of 39 cents per pound, but $10-12/cwt below year-ago levels. USDA is forecasting 2006 per capita meat supplies will be 3 pounds more than last year. That shouldn't be enough to make this year a money loser for hog producers, but industry profits are expected to be smaller.

Last year, the U.S. exported a record $2.3 billion of pork. That equaled $22 for each hog we slaughtered in 2005. The odds appear good that 2006 will be our 15th consecutive record year for pork exports.

This week's hog slaughter is estimated by USDA at 1.971 million hogs, up 0.3% compared to this week in 2005. Since December 1, hog slaughter has averaged 1% higher than the same period last year. This is slightly above the 0.5% increase indicated by the December inventory report.

February was the 25th consecutive profitable month for hog producers. So, it shouldn't be surprising that the mix of barrows and gilts in our slaughter sample indicates the sow herd is expanding. Look for the breeding herd to be up 1-2% in USDA's next quarterly inventory survey, which will be released at the end of this month.

Weekly trade data indicate that the number of slaughter hogs imported from Canada in the last three months was down 4% compared to December-February 2005, but the number of feeder pigs imported from Canada was up 12%. It seems reasonable to expect that relationship, more feeder pigs and fewer slaughter hogs, to hold for much of 2006. Statistics Canada says the Canadian swine breeding herd was slightly smaller at the start of 2006 than a year earlier, so total live hog imports from Canada this year should be fairly close to 2005 levels.

Slaughter weights began 2006 at record levels. Barrow and gilt carcass weights averaged 202 pounds each of the first two weeks of the year. That was 3 pounds heavier than at the start of 2005. In mid February carcass weights were down to 199 pounds, the same as a year earlier. However, the Iowa-Minnesota live weight series has been steadily running 2-3 pounds heavier than last year.

The April lean hog futures contract ended the week at $62.00/cwt, up 58 cents from last Friday. The May contract settled at $68.77 today, up $1.40 for the week. June closed the week at $70.50/cwt and July settled at $69.22.

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