Hog Outlook: Three Consecutive Weeks of Slaughter Above Average

US Weekly Hog Outlook, 27th October 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.
calendar icon 27 October 2007
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The average weight of barrows and gilts in Iowa-Minnesota at 267.7 pounds was down 0.2 pound from a week earlier and up only 0.7 pound from a year earlier. This plus-0.7 pound is the closest the weight has been to a year earlier since mid-August.

It appears the record high slaughter in the last three weeks is keeping marketings current. We have had three weeks of slaughter above 2.3 million head under Federal Inspection and expect this week to be the fourth week above 2.3 million head. The price of hogs is holding up very well with this level of slaughter, which is up about seven percent from 2006.

We do not believe we have had the high in weekly slaughter for 2007, and slaughter will continue to be large with the high weekly slaughter likely coming in early December.

The average net cash price for the hogs sold by producers other than packers averaged $43.70 per cwt live or $59.05 per cwt carcass for the October 24 slaughter. Current costs are believed to be about $47 per cwt live or $63.50 per cwt of carcass for the average-cost producer.

We still believe negotiated live hog prices will average $40 or better for the fourth quarter, but there is a high probability for some periods for the average live negotiated price to start with a "3" before we get to 2008.

The producers who forward-priced hogs on the futures market for the current time are seeing prices $7-10 per cwt above the current negotiated price.

It has only been three weeks since the September Hogs and Pigs report was released but our gilt count average has shown 50.8 percent of the mix to be gilts. One cannot form an opinion that is very strong that producers have started to reduce the breeding herd with only three weeks of data but the data is encouraging, and we hope producers will reduce the size of the breeding herd quickly.

With the continued high slaughter carcass cutout, values weakened this week. For the week through Thursday, the cutout at $59.87 per cwt of carcass was down $2.21 per cwt from a week earlier. Loins were down $4.44 per cwt at $74.14 per cwt, Boston butts at $62.51 per cwt were down $2.59 per cwt, hams were up $1.81 per cwt at $50.86 per cwt, and bellies at $69.07 per cwt were down $3.98 per cwt compared to seven days earlier.

Feeder pig prices at United Tel-O-Auction this week were basically steady with two weeks earlier. Pigs weighing 50-60 pounds sold from $55 to 70.50 per cwt. We hear that weaner pigs are selling in the mid-teens. The trade reports are that the supply of pigs at current time is larger than feeding space.

Cash live hog prices Friday morning were $0.75-1.00 lower compared to a week earlier. The weighted average carcass prices in negotiated trade Friday morning were $0.93-2.70 compared to seven days earlier.

The top live prices Friday morning for select markets were: Peoria $34 per cwt, St. Paul $37 per cwt and interior Missouri $38.75 per cwt. The weighted average carcass prices by geographic area for negotiated hogs Friday morning were: western Cornbelt $53.16 per cwt, eastern Cornbelt $51.65 per cwt, Iowa-Minnesota $54.50 per cwt and nation $52.08 per cwt.

Slaughter under Federal Inspection was estimated at 2,324 thousand head, up 6.5 percent from a year earlier and the fourth consecutive week above 2.3 million head.

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