Exports Underpin Growth in Live Hog Demand

US Weekly Hog Outlook, 3rd February 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 3 February 2007
clock icon 4 minute read

The demand for pork for all of 2006 shows a loss of about 4.5%. The good news continues to be the demand for live hogs, which for 2006 showed a small gain of 0.1% from a year earlier. Also, good news is that the demand for pork for October - December of 2006 was down but only 0.8% from 12 months earlier. Demand for live hogs for October - December showed a modest growth of 1.3% from 2005.

The major reasons for the live hog demand growth compared to pork are pork exports up, pork imports down and population growth for the year of 2006 compared to 2005.

Feeder pig prices this week at United Tel-o-auction were steady to a few dollars higher per cwt than two weeks ago. The prices at United by weight groups showed 50-60 pound pigs at $80-90 per cwt and 60-70 pounds at $73-76 per cwt.

The prices at United for 50-60 pound pigs 12 months ago were $121-132.50 per cwt and 60-70 pound pigs sold for $95-117.50 per cwt for the week ending February 3, 2006. There is no mystery why the lower pig prices - corn prices in the upper $3 per bushel in the Midwest is the reason.

This week two announcements were made about hog slaughter plants that is bad news for hog producers. In Canada, Olymel's Vallee-Jonction plant, Union rejected Olymel's final offer. The company said they would close the plant in early July if the union rejected the company's offer. Also, Sara Lee announced they would close the Bryan Foods Plant in Mississippi on March 30.

The two plants have a combined capacity of about 13,000 head per day. This is some below the 16,000 head a day that was added to North American hog slaughter capacity by Triumph Foods in 2006.

The weight of barrows and gilts for last week were down 0.1 pound from a week earlier and 2.1 pounds below a year ago. This was the eighteenth consecutive week for barrow and gilt weights in Iowa-Minnesota to be below 12 months earlier.

The average percent gilts in the slaughter mix for the five weeks ending January 27 was below a year earlier and the long-time average. This data does not indicate hog producers are reducing the breeding herd.

The cutout per cwt of carcass Thursday afternoon was down $1.06 per cwt at $63.08 per cwt from a week earlier. The price of loins at $79.76 per cwt was down $0.20 per cwt, Boston butts were down $0.48 per cwt at $71.16 per cwt, hams were down $2.38 per cwt at $50.76 per cwt and bellies at $87.43 per cwt were up $4.88 per cwt from 7 days earlier.

The price of live hogs this Friday morning was $2.00-3.00 higher compared to a week earlier. The price of weighted average negotiated carcasses was $1.70-4.89 higher compared to 7 days earlier.

The top live prices for select markets this Friday morning were: Peoria $41.00 per cwt, St. Paul $46.00 per cwt, Sioux Falls $47.50 per cwt and interior Missouri $43.00 per cwt.

The weighted average negotiated carcass prices per cwt by area this Friday morning were: western Cornbelt $63.54 per cwt, eastern Cornbelt $62.80 per cwt, Iowa-Minnesota $62.39 per cwt and nation $62.98 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,045 thousand head, up 0.4% from a year earlier.

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