Hog Report Confirms Herd Growing Slowly

US Weekly Hog Outlook, 6th October 2006 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 7 October 2006
clock icon 4 minute read
Ron Plain
Ron Plain

The September Hogs and Pigs report confirmed the belief that hog producers were growing the hog herd but at a relatively low rate. All hogs and pigs were up 1.4 percent, the market herd was up 1.3 percent, and the breeding herd was up 1.8 percent.

The breeding herd was quite consistent with the gilt and sow slaughter data. The 180-pounds-and-heavier market inventories were up 2.6 percent but hog slaughter in September on a daily basis was up some less than 4 percent. Total September slaughter was below September of 2005 because of one less weekday slaughter day this year than last year.

Hog weights for last week were 0.5 pound per head below a year earlier even though last week's weight was 0.7 pound above seven days earlier. Last year weights increased over three pounds between these two weeks. Weights for the previous week to last week were 2.1 pounds above the 2005 corresponding week. So, it is difficult to look at one or two weeks of weights and draw realistic conclusions about what they mean, but we may have pulled marketings forward some with the strong September prices.

If the industry can hold the strong live hog demand and hog marketings are consistent with the September market inventories, we will set a new record for consecutive months of profit for the average cost producer in November. The current record based on data from Iowa State University is 33 months.

The nearly two percent increase in the size of the breeding herd occurred mostly in the Cornbelt: Illinois, Indiana, Kansas, Missouri, Ohio, South Dakota and Wisconsin.

Demand continues to be the key to how long this run of profits to hog producers can continue. We had expected some decline in live hog demand from the summer levels of 2004 and 2005, but preliminary data show a little growth this year in June - August compared to a year earlier. However, production probably will increase enough along with higher feed prices to push the average cost producer into the red, at least by the fourth quarter of 2007.

Slaughter on a daily basis in September has set a new record high. The largest day for number slaughtered under Federal Inspection was 419,151 head on September 12. The 11 largest days of federally inspected slaughters of record have been in September 2006, and we still have one week that we do not have final data for. The increase in slaughter capacity as a result of efficiencies in the industry and the new Triumph plant is certainly needed this fall.

The top live hog prices Friday morning for select markets were Peoria $45.50 per cwt, St Paul $48 per cwt, Sioux Falls $49 per cwt and interior Missouri $47.25 per cwt. The weighted average negotiated carcass prices by area were: western Cornbelt $65.77 per cwt, eastern Cornbelt $64.68 per cwt, Iowa-Minnesota $66.14 per cwt and nation $63.24 per cwt.

Pork product prices per cwt of carcass on Thursday were at $68.42 per cwt up $0.97 per cwt for the week and holding very well considering the slaughter levels for the last month.

Slaughter this week under Federal Inspection was estimated at 2,159 thousand head, up 3.8 percent from a year earlier.

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