Retail price of pork up

US Weekly Hog Outlook, 18th August 2006 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.
calendar icon 19 August 2006
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Ron Plain
Ron Plain

Sow slaughter continues to run substantially above year earlier levels. This larger slaughter started in early March. For the period of week ending March 11 through the week ending August 5, we slaughtered 127-thousand more sows from domestic U.S. production in 2006 than in 2005.

For just June and July of this year, we have slaughtered nearly 42 thousand more sows than a year earlier from domestic production. The imports of cull sows and boars from Canada have been removed from the data.

Gilt slaughter for both of these periods has been slightly larger in 2006 than in 2005.

Is it possible that we are reducing the size of the breeding herd with the average producer with 30 consecutive months of profit and still counting? I believe the odds are near zero.

At this time we can only conclude that the breeding herd is being reduced or some of our data is incorrect. There does not appear to be any other logical explanation. If these larger slaughter numbers for sows and gilts continue through August, it will add additional anticipation for what the September 1 Hogs and Pigs Report will show about the size of the breeding herd.

We hear from the trade that there is some growth occurring by the mid- to large- size producers. However, we have very limited information about what small hog producers are doing as to their herd size. Is it possible that all of the discussion about higher corn prices for the next several years is contributing to some producers reducing their hog herd or exiting the industry completely?

Live weights of barrows and gilts in Iowa-Minnesota stabilized last week with weights at 259.9 pounds per head, up 0.1 pound from a week earlier. Weights for last week were still 1.1 pounds above 12 months earlier. In the last two years, average weights have started the seasonal increase during the third week ending in August. With the cooler weather over much of the Cornbelt this week, there is a good chance for weights to grow this week from a week earlier.

For January - June, net pork exports were 10.05% of production. This is up a short 2% of production from the same period in 2005. Cash hog prices would probably have been about 10% lower than they have been without this export growth. For this six month period, live hog prices 51-52% lean U.S. basis have averaged $45.54 per cwt. Without the increase in pork exports, the 51-52% lean hogs would probably have averaged about $41.00 per cwt.

There is good news from north of the U.S. border. Canada's hog breeding herd on July 1 was down slightly from last year at 99.6% of the 2005 level. The total Canadian herd on July 1 was down 3.1% from a year earlier.

The retail price of pork for July was up from June by 1.4% and the highest it has been since June of 2005. The July 2006 price was $2.842 per pound compared to $2.840 last July.

Hog prices held well this week with slaughter up in the mid-1900 thousand head. Top live prices Friday were down $1.00 to up $1.00 per cwt compared to last Friday morning.

The top live prices Friday morning for select markets were: Peoria $47.00 per cwt, St. Paul $51.00 per cwt, Sioux Falls was unavailable and interior Missouri $47.50 per cwt. The weighted average carcass price for negotiated hogs Friday morning by area were: western Cornbelt $71.15 per cwt, eastern Cornbelt $68.24 per cwt, Iowa-Minnesota $71.89 per cwt and nation $69.33 per cwt.

Slaughter this week under Federal Inspection was estimated at 1965 thousand head, down 0.5% from a year earlier.

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