Canada's quarterly Hog statistic report was released last week by Statistics Canada. The report showed a continuing decline in hog numbers.

Canada's inventory of pigs weighing over 20 kg (about 44 pounds) was 7.6 percent smaller this October 1 compared to last year. The reduction in market pigs reflects the increase in pig imports by the U.S. from Canada, which were up 7.5 percent through August.

The Canada's herd has now declined for 10 consecutive quarters from a year earlier and reflects the financial pressure the Canadian hog producer have been experiencing.

The Canadian dollar earlier this week was worth about five percent more than the US dollar. This means the price received for hogs in Canada has declined about 35 percent relative to what price the U.S. producers has received in last few years. We expect the Canadian dollar to continue strong relative to the U.S. dollar and Canadian hog producers are expected to continue to reduce the size of their hog herd.

The five weeks gilt data we have following the release of the September Hogs and Pigs report continue to show the potential for breeding herd reduction. This is very early for this to happen and we cannot confirm that some producers are reducing their herd or getting out of production with trade reports. Therefore, we are not able to rule out the possibility that the high count is not just sample fluctuation or error.

Demand for live hogs appears to be very strong. With slaughter up about 5.5 percent on a daily basis during September and October, prices have been down only about 10 percent. This is at least 10 percent higher and possibly 15 percent higher than recent data would indicate should be with slaughter up 5.5 percent. One must remember that with only two months in the data series the relationships between supply and price can be quite unpredictable but I sure like what has happened to price in September and October with a 5.5 percent increase in slaughter.

Live barrow and gilt weights in Iowa and Minnesota at 267.7 pounds the same as a week earlier and up only 0.1 pounds from a year earlier. The large hog slaughter levels of recent week appear to be keeping markets very current.

Live hog prices Friday morning were $1.00-3.75 per cwt lower compared to a week earlier. The weighted average negotiated carcass prices Friday morning were $3.14-4.15 per cwt lower compared to seven days earlier.

The live prices for select markets Friday morning were: Peoria $33.00 per cwt, St. Paul $35.00 per cwt, and interior Missouri $35.00 per cwt. The weighted average carcass prices for negotiated hogs by geographic area were: western Cornbelt $50.02 per cwt, eastern Cornbelt $47.68 per cwt, Iowa-Minnesota $50.35 per cwt, and nation $48.83 per cwt.

Slaughter this week under Federal Inspection was estimated at 2322 thousand head, up 6.2 percent from a year ago. The last five weeks have been the five largest week slaughter of record.

Pork product lost substantial ground for the week. For Thursday afternoon pork cutout at $57.37 was down $2.50 per cwt from a week earlier.