The big news in the markets continues to be the weakness of the economy. The National Bureau of Economic Research officially declared a U.S. recession this week. The Dow Jones industrial average has dropped 3,000 points since mid year. This recession has also brought with it a huge drop in commodity prices. Since early July, crude oil prices are down 70%, copper down 65%, lumber is off 34%, corn and soybeans down 50%, fed cattle down 15% and hog prices are off 25%. It’s hard to name a commodity that hasn’t dropped in value. Even gold is down 20%. Stability in the economy would be one of the best things that could happen to the market for farm commodities. The U.S. dollar has strengthened against most major foreign currencies since mid year. The strong dollar is driving down the cost of imported goods such as oil, but will make it more difficult for U.S. farm products to compete in international trade.

Cash hog prices ended the week mostly $1-3 higher than last Friday. The top price Friday at Sioux Falls was $39/cwt. Peoria and Zumbrota, MN topped at $37/cwt. The interior Missouri top Friday was $39.50, up $2.25 for the week. The national weighted average carcass price Friday morning for negotiated hogs was $54.10/cwt, $1.63 higher than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $54.59, western corn belt $52.60, and Iowa-Minnesota $52.66/cwt. Eastern corn belt prices have been above western corn belt most of the week, something that is a bit unusual.

USDA’s Thursday afternoon calculated cutout value was $60.24/cwt, up $1.39 from the previous Thursday thanks to seasonal strength in the ham market. Pork loins, pork bellies and Boston Butts were all lower than the previous week. In a few days it will be too late to process hams for the Christmas market and ham prices will drop.

This week’s hog slaughter was 2.373 million head, down 0.17% compared to the same week in 2007. On a weekly basis, year-to-date hog slaughter is up 6.5% and year-to-date pork production is up 6.2%. Thanks to strong pork exports and reduced imports, the supply of pork on the domestic market is down compared to 2007.

The average carcass weight of barrows and gilts slaughtered the week ending November 22 was 200 pounds, same as the week before and 1 pound lighter than for the same week in 2007. The average carcass weight of barrows and gilts has been below year-ago levels this year for all but 6 weeks. If feed prices stay close to current levels, slaughter weights are likely to increase in 2009.

The December lean hog futures contract ended the week at $57.45/cwt, down $2.05 from last Friday. The February contract settled at $64.20 today, down $2.82 for the week. April closed the week at $69.375/cwt.