The Hogs and Pigs report for March 30 came in a bit more bullish than we expected but quite close to trade expectations.

The report showed the continued slow expansion of recent reports.

We are concerned that the heavier-weight market inventories are underestimated. The 180-pounds-and heavier-weight market inventories were up 3.8% and marketings during March were up about 3.5% on a daily basis --- a very good fit. However, the 120-179 pound inventories were down slightly from 2006. The big question is why slaughter would go from being up 3.5% on a daily basis in March to being down slightly from a year earlier by mid-April. The data does not suggest producers increased marketings in March by pulling marketings forward. Barrow and gilt weights in Iowa-Minnesota were 2.85 pounds per head below a year earlier in February. For the week ending March 24, barrow and gilt weights in Iowa-Minnesota were the same as a year earlier; and for the week ending March 31, weights were only 0.1 pound below a year earlier.

The Iowa-Minnesota barrow and gilt weights suggest marketings were delayed through March unless weather and other conditions were enough more desirable for rates of gain to increase weights almost three pounds more in March of 2007 than in 2006. This is possible, but not likely in our opinion.

Demand for live hogs looks some stronger this year than last. If we do pull marketings back to year-earlier levels in the next two weeks, prices are likely to rally substantially. However, do not be surprised if marketings continue above year-earlier levels through April and May.

Demand for pork for December-February was down about 2.9% from a year earlier. Beef was down 0.8%, broilers were down 8.3% and turkey was down 13.4%.

The good news continues to be live hog demand, which for December-February of 2006-2007 was up 1.2%. Live fed cattle demand for these three months was down 0.4% from a year earlier.

Have we finally come to that time where broiler demand does not grow practically every year? For all of 2006, broiler demand was down over 7% from 12 months earlier. If broiler demand at the consumer level continues down through 2007, near the 2006 level, the decline will be the first major decline in consumer broiler demand since the early 1980s.

The live hog prices this Friday morning were $1.00-2.25 per cwt higher compared to last Friday. The weighted average negotiated carcass prices by areas were $2.92-3.81 per cwt higher compared to a week earlier on Friday morning.

The prices of live hogs for select markets were: Peoria $40.00 per cwt, St. Paul was unavailable and interior Missouri $44.00 per cwt. The weighted average negotiated carcass prices by areas Friday morning were: western Cornbelt $61.23 per cwt, eastern Cornbelt $62.11 per cwt, Iowa-Minnesota $61.89 per cwt and nation $61.61 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,035 thousand head, up 1.1% from a year earlier.

The pork cut-out per cwt of carcass for Thursday afternoon was at $65.24 per cwt, up $0.46 per cwt for the week. Loin prices were up $1.47 per cwt at $79.10 per cwt, Boston butts at $73.20 per cwt were down $0.51 per cwt, hams were up $0.24 per cwt at $48.45 per cwt, and bellies at $90.35 were basically steady with 7 days earlier. Pork cut-out continues to hold quite well with the record slaughter.