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Weekly Review: Hog Slaughter Was 2.419 Million Head

by 5m Editor
21 January 2008, at 8:47am

US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

This week's hog slaughter was 2.419 million head, up 17.3% compared to the same week in 2007. This was only the third week in history that slaughter has exceeded 2.4 million head. Each has been in the last 5 weeks. Hog slaughter since the end of September has been up 8.8% compared to a year ago. Over the last 6 weeks, hog slaughter has been up 10.3% compared to a year earlier. A very effective vaccine for circovirus and a breeding herd in early 2007 that was at least 5% larger than the year before are our explanations for this surge in slaughter. Unfortunately, these reasons give little hope for a decline in slaughter anytime soon.

The week ended with hog prices little changed from seven days earlier. The top price Friday at Peoria was $26/cwt, the same as the previous Friday. St Paul was steady at $29/cwt. The interior Missouri top Friday was $32, unchanged for the week. The national weighted average carcass price Friday morning for negotiated hogs was $46.27/cwt, $0.87 higher than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $45.94, western corn belt $47.28, and Iowa-Minnesota $47.29/cwt. Carcass prices are roughly $12 lower than at this time last year. Most producers lost more than $30/head on hogs sold this week.

The cutout value was a bit lower this week. The Thursday afternoon USDA calculated cutout value was $55.29/cwt, down $0.40 from the previous Thursday. Pork loins and Boston Butts were lower. Hams and pork bellies were higher.

Holding up

Given the huge supply, retail pork prices aren't doing badly. December pork prices at retail averaged $2.859 per pound, up 9.1 cents compared to 12 months earlier. Domestic pork demand ended 2007 on a strong note. The growth in pork demand was stronger in the fourth quarter of 2007 than the other three quarters. This is a good lead-in to 2008. Hopefully, high energy prices and rising unemployment won't disrupt the trend.

The average carcass weight of barrows and gilts slaughtered the week ending January 5 was 203 pounds, up 2 pound from the same week in 2007. The average for 2007 was 198 pounds, up 0.4 compared to 2006. This was a bit smaller year-to-year increase than normal, but still sizable given corn prices averaged more than $1 per bushel higher in 2007 than 2006.

Sow slaughter during the last 3 weeks of December and the first week of January was down 2.5% compared to a year earlier, but appears to have picked up in mid January. The word is that sow kill plants are running close to capacity. Sow prices are low, especially for light weight sows. Hopefully, this is an indication of a coming reduction in the breeding herd.

The February lean hog futures contract ended the week at $54.97/cwt, up $0.97 from last Friday. The April contract settled at $62.42 today, up $0.17 for the week. May closed the week at $71.65/cwt and June settled at $75.45. The futures market continues to be optimistic about late 2008. The December contract closed at $73.82, roughly $18/cwt above where the December 2007 contract expired.

5m Editor