Hog Outlook: Increase of Retail Price Bid Through to the Live Animal

US Weekly Hog Outlook, 13th October 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 13 October 2007
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Demand for all meats with the exception of broilers was up for January-August from a year earlier. Demand for pork at the consumer level was up 1.9 percent, beef up 0.8 percent, turkey up 3.2 percent but broilers down 1.9 percent.

Both live hogs and live fed cattle demand was up substantially for the first eight months of 2007 compared to a year earlier. Live hog demand for this period was up 3.3 percent and live fed cattle demand was up 3.8 percent. Most or all of the increase in live hog demand came from the domestic market. Retail pork prices were up 2.3 percent but the total markets margin was up only 1.3 percent. Therefore, most of the increase in retail price was bid through to the live animal.

The following table presents production information about U.S. hog producers based on a study by the University of Missouri and Iowa State University with financial assistance from National Pork Board, Pig Improvement Company and Pork magazine.

Production Information 2006 Percent of U.S. Hogs Affected
Feed is self prepared 54 %
Replacement gilts are purebred 32
Hogs are raised indoors 94
Feeding is split serve 64
Facilities are wean finish 29
Grain raised by own farm 35

The grain raised by own farm fluctuates from two percent for produce production 500 thousand or more hogs annually to 79 percent for the produce producing 3-5 thousand hogs annually. With the higher corn price expected for the foreseeable future this increases the competitiveness of the farms that produce most or all of their grain needs.

The average live weight for the week ending October 6 was 268.1 pounds per head up 0.8 pounds from a week earlier and up 1.5 pounds per head from a year earlier. There appears to be enough market ready hogs to keep slaughter at record high levels.

Pork product prices rallied a bit this week in the face of record slaughter. Rumor is that export to Russia is helping.

The cut out per cwt of carcass this Thursday afternoon at $61.47 per cwt, up $0.77 per cwt from a week earlier. Loins were up $2.95 per cwt at 75.77 per cwt, Boston butts at $59.16 per cwt up $0.39 per cwt, hams up $2.54 per cwt at $52.13 per cwt and bellies at $73.41 per cwt down $0.58 per cwt from a week earlier.

Top live hog prices this Friday morning steady to $0.50 per cwt higher compared to a week earlier. Weighted average negotiated carcass prices by area Friday morning were 1.22 to 3.30 per cwt higher compared to seven days earlier.

Slaughter this week under Federal Inspection was estimated to be another record high at 2,348 thousand head, up 1.2 percent from last week's record number and up 8.7 percent from the same week in 2006.

Feeder pig prices last week at United Tel-O-Auction were $10-20 per cwt below two weeks earlier. All of the pigs weighed between 50-60 pounds sold from $56-63 per cwt.

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