Ron Plain

The Hogs and Pigs report for June 1 showed quite slow growth. The total herd was 100.3%, the breeding herd was 101.4%, and the market herd was 100.2% of a year earlier.

Why are hog producers growing the industry so slowly with one of the longer profit periods of history? There are probably several reasons, some of them are: the memory of 1998 and 1999 is still fresh in the minds of most hog producers, the more concentrated industry limits short-term flexibility, the high costs of facilities, and the permitting process for building new facilities is slow.

Even though this report was somewhat bullish compared to trade expectations, it still shows growth. Slaughter and pork production in 2006 is expected to set a new record high. The good news is that total meat production of pork, beef, broiler, and turkey in the last half of 2006 is expected to be about the same if not a little lower than a year earlier.

However, pork production in the last half of 2006 is likely to be lightly larger than a year ago. But there is a possibility that production may be reduced from the production expectations based on the June report by circovirus death loss and smaller slaughter imports from Canada.

For the third quarter, we expect 51-52% lean hogs to average between $45.00 and $48.00 per cwt; the fourth quarter, between $42.00 and $45.00 per cwt; the first quarter of 2007, $40.00 to $43.00 per cwt; and second quarter of 2007, $44.00 to $47.00 per cwt.

Possibly higher feed costs due to the amount of corn used in ethanol production is a distinct possibility for the hog industry.

Pork cutout held fairly well this week. Thursday afternoon the cutout was at $76.36 per cwt, down $1.36 per cwt from a week earlier.

Pork product wholesale prices were mixed: loins at $93.45 per cwt were down $1.50 per cwt, butts down $4.31 per cwt at $77.18 per cwt, hams up $0.02 at $63.11 per cwt, and bellies up $0.10 at $105.11 per cwt.

Live hog prices Friday morning were down $1.00 to $3.50 per cwt compared to a week earlier. These top live prices for select markets were: Peoria $44.50 per cwt, St. Paul $50.00 per cwt, Sioux Falls $50.00 per cwt, and interior Missouri $48.25 per cwt.

Weighted average carcass prices Friday morning were $0.15 to $1.22 per cwt lower compared to a week earlier. The Friday morning prices by area were: western Cornbelt $70.08 per cwt, eastern Cornbelt $70.47 per cwt, Iowa-Minnesota $70.13 per cwt, and nation $69.93 per cwt.

Slaughter this week under Federal Inspection was estimated at 1638 thousand head, up 1.2% from a year earlier.

Feeder pigs at United Producers Tel-O-Auction this week were a little higher on the light weights and lower on the 60 to 70 pound pigs than two weeks ago. The prices by weight groups were: 40-50 pounds $94.00 per cwt, 50-60 pounds $90.50 to $93.00 per cwt, and 60-70 pounds $86.00 to $92.00 per cwt.

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