Hog Outlook: The Week Sees Strong Downward Pressure

US Weekly Hog Outlook, 30th June 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 30 June 2007
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The barrow and gilt weights for Iowa and Minnesota continued the seasonal decline last Wednesday. For the week ending June 24, the average weight was 263.8 pounds per head, down 0.8 pound from a week earlier but up 0.9 pound from a year earlier. This was the fourth consecutive week for weights to be above last year.

Demand at the consumer level for January-May of 2007 for all meats with the exception of broilers was up a little. Pork consumer demand for these five months was up 0.6 percent, beef was up 1.1 percent, turkey up 3.8 percent and broilers down 3.5 percent.

Demand for live hogs and live fed cattle showed good growth for January-May 2007 compared to 2006. Live hog demand was up 3.8 percent and live fed cattle demand was up 4.7 percent for these 5 months.

The June 1 Hogs and Pigs report will be released this Friday afternoon. The trade estimates are for the total herd to be up 1.4 percent, breeding herd up 0.5 percent and market herd up 1.3 percent from a year ago. We hope these estimates are close to actual but are afraid that the numbers are larger than the average of the trade estimates.

Hog prices came under strong downward pressure this week as packers strived to improve margins.

The prices of live hogs Friday morning were substantially lower than a week earlier. The actuals were $1.50 to $5 per cwt lower compared to seven days earlier. The weighted average negotiated carcass price was $5.60 to $6.37 per cwt lower compared to last Friday.

The top live prices Friday morning were Peoria $48.50 per cwt, St. Paul $50 per cwt and interior Missouri $51.50 per cwt. The weighted average carcass prices Friday morning were: western Cornbelt $72.94 per cwt eastern Cornbelt $68.83 per cwt, Iowa-Minnesota $73.24 per cwt and nation $71.02 per cwt.

The cutout was also lower this week. The Thursday afternoon cutout per cwt of carcass at $74.13 per cwt was down $4.33 per cwt for the week. Loins were down $5.84 per cwt at $89.29 per cwt, Boston butts at $79.08 per cwt were down $4.70 per cwt, hams were down $5.87 per cwt at $57.22 per cwt, and bellies at $98.48 per cwt were down $2.05 per cwt on Thursday afternoon compared to a week earlier.

Slaughter this week under Federal Inspection was estimated at 1,939 thousand head, up 4.3 percent from a year earlier.

The June 1 Hogs and Pigs report came in relatively close to trade expectations. The total herd, market herd and breeding herd were a little higher than the average of the trade reports. The USDA estimate showed the total herd up 1.8 percent, the market herd up 1.8 percent and the breeding herd up 0.9 percent.

Slaughter in June was up about four percent on a daily basis. USDA showed the 180-pounds-and-heavier market inventories up three percent. Slaughter in the second quarter was up a bit over two percent more than indicated by the March report.

For the third quarter, our estimate of the 51-52 percent live hogs is $48-51 per cwt. For the fourth quarter, our estimate of the 51-52 percent lean live is $44-47 per cwt. These estimates are for slaughter to be about one percent more in the last half of 2007 than indicated by the June Hogs and Pigs report.

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