Hog Outlook: Four Months of Flat Consumer Level in Demand for Pork

US Weekly Hog Outlook, 2nd June 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 2 June 2007
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Slaughter barrow and gilt weights last week in Iowa-Minnesota were up 0.3 pound per head from a week earlier at 265.8 pounds per head but down one pound from a year earlier. For the last eight weeks, barrow and gilt weights have averaged 1.4 pounds below a year earlier. This data suggests marketings are probably about one day more current than a year earlier.

Demand for pork at the consumer level for January - April was basically flat with a year earlier showing a loss of 0.2 percent. Pork demand between 1985 and 2004 was also basically flat showing a loss of two percent in those 20 years. The last two years pork demand has showed losses of over four percent each year.

The good news continues to be live hog demand, which is the demand level most important to hog producers. For the first four months of 2007, live hog demand is up 3.7 percent.

In the last 21 years from 1985 to 2006, live hog demand was up about 22 percent or an average growth of one percent each year. The reason for the difference in live hog demand and consumer demand is population growth and imports/exports. In consumer demand, the calculation is on the individual consumer.

Broiler demand for January - April was down 5.1 percent but improving from a month earlier. Beef demand was also basically flat with a year earlier showing a growth of 0.2 percent from 2006. Turkey demand was up 2.6 percent from a year earlier for January - April.

Our first effort to estimate the June 1 Hogs and Pigs report shows the breeding herd up 0.5 percent, the market herd up 1.6 percent and the total herd up 1.5 percent from 2006. All signals, with the exception of the corn prices, have been to grow the herd.

In the 2006 hog structure study being done by the University of Missouri and Iowa State University with assistance from Pork magazine, National Pork Board and Pig Improvement Company, all-size producers have plans to expand production from 2006 to 2007 and 2006 to 2009.

Pork product prices Thursday afternoon at 74.24 per cwt were down $1.89 per cwt from a week earlier. Loin prices were down $2.23 per cwt at $94.50 per cwt, Boston butts at $71.09 per cwt were down $1.62 per cwt, hams were up $1.75 per cwt at $56.40 per cwt and bellies were down $8.73 per cwt at $102.40 per cwt Thursday afternoon compared to a week earlier.

Live hog prices Friday morning were $0.50 per cwt to $2.25 per cwt lower compared to a week earlier. Average weighted carcass prices for the negotiated hogs Friday morning were $1.61 per cwt to $4 per cwt lower compared to seven days earlier.

The top live prices Friday morning for select markets were: Peoria $47.50 per cwt, St. Paul $49 per cwt and interior Missouri $50.50 per cwt. The weighted average carcass prices by geographic area were: western Cornbelt $68.84 per cwt, eastern Cornbelt $68.90 per cwt, Iowa-Minnesota $67.44 per cwt and nation $68.89 per cwt.

Last year during June, the full week slaughters ranged from 1.821 million head to 1.897 million head. Some industry observers expect weekly slaughter to be above 1.9 million head. If this occurs and the number is much above 1.9 million head, we may have had the high in hog prices for 2007.

Slaughter this week under Federal Inspection was estimated at 1,720 thousand head, up 2.8 percent from a year earlier.

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