Hog Outlook: Need for Increase in Hog Prices

US Weekly Hog Outlook, 28th April 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 28 April 2007
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Pork demand at the consumer level continues to show modest losses with a loss of 1.7% for January - March of 2007 compared to a year earlier. As the situation has been now for several months, the demand for live hogs continues to show some growth. For the first three months of 2007 live hog demand was up 2.2% from the same months of 2006.

Cold storage stocks of pork on March 31 were at the same level as a year earlier. Ham stocks were near a year earlier, belly stocks were down 10%, loin stocks were up 2%, rib stocks were down 4% and Boston butt stocks were down 2% on March 31 from 12 months earlier.

Gilt and sow slaughter data continues to show little, if any, change in size of the U.S. breeding herd. If we can continue to get 1-2% increase in live hog demand, we maybe able to move to the higher feed prices without reducing the size of the U.S. breeding herd. However, the odds are probably quite low for this to happen. The most likely continues to be for the necessity of reducing the U.S. herd at least 3-5% in the next 3 years with continued $3-4 corn.

The average weight of barrows and gilts in Iowa-Minnesota last week at 268.6 pounds was up 0.2 pound from a week earlier but 0.9 pound below a year earlier. For the four weeks ending April 22, live barrow and gilt weights in Iowa-Minnesota averaged 268.8 pounds per head; for the same four weeks in 2006, the average weight was 269.3 pounds. This data suggests marketings may be a little more current at present than a year earlier.

Pork cut-out values pushed higher again this week with the cut-out Thursday afternoon at $75.96 per cwt, up $5.43 per cwt from a week earlier. Loin prices were up $9.49 per cwt at $98.20 per cwt, Boston butts at $75.95 per cwt were up $2.64 per cwt, hams were up $9.12 per cwt at $64.29 per cwt and bellies at $94.93 per cwt were up $0.33 per cwt compared to 7 days earlier.

The product prices will need to increase substantially more if hog prices in May and June reach the prices being reflected at current time for this month in the futures market.

The top live hog prices Friday morning were steady to $1.75 per cwt higher compared to last week. The weighted average carcass prices in the negotiated trade Friday morning were up $0.80-4.25 per cwt compared to Friday last week.

The top live hog prices Friday morning for select markets were: Peoria $46.50 per cwt, St. Paul $48.00 per cwt and interior Missouri $48.50 per cwt. The weighted average carcass prices by geographic area Friday morning were: western Cornbelt $70.25 per cwt, eastern Cornbelt $67.22 per cwt, Iowa-Minnesota $71.06 per cwt and nation $68.35 per cwt.

Slaughter this week under Federal Inspection was estimated at 1,975 thousand head, down 0.3% from a year earlier.

Feeder pig prices at United Tel-o-auction this week were steady to $12 per cwt higher than two weeks ago. Prices by weight groups were 40-50 pounds $115.50 per cwt, 50-60 pounds $104-120 per cwt and 60-70 pounds $97 per cwt.

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