The current cutback in broiler production is big in absolute terms as well as based on history. US broiler slaughter for the 52 weeks ending 27 December was 0.7 per cent lower than the previous 52 weeks. Broiler production has a record of growth practically every year and the declines in the past have been small --0.2 per cent or less.

Fourth quarter broiler slaughter was 5.8 per cent lower than one year earlier. Broiler egg sets were 7.6 per cent lower in the fourth quarter of 2008 compared to a year earlier. This suggests broiler production in the second quarter will continue at record-high reductions from 12 months earlier.

Also positive is the broiler-type hatchery flocks. As of 1 December, 2008, they numbered only 52.4 million head, the lowest level since September 1997.

The cross-demand relationship between pork and poultry is quite high based on the most recent research. Therefore, this reduction in poultry supplies and higher prices should be positive to pork demand.

Pork exports in November were up from a year earlier but by only 0.47 per cent. Exports of pork to Hong Kong and Mainland China were down 57 per cent from 12 months earlier.

For the first 11 months of 2008, total pork exports were up 53.45 per cent. Mainland China and Hong Kong purchases from the US were up 155.7 per cent for January-November.

Pork imports for January-November into the US were down 15.7 per cent and for November, pork imports were down 6.0 per cent from 12 months earlier.

For January-November, net pork exports in 2007 were 9.73 per cent of production. For the same months of 2008 they were 16.91 per cent of production. In other words, we reduced the supply of pork for domestic consumption by 7.18 per cent of production.

For November 2007, net pork exports as a per cent of production were a positive 13.2 per cent. For the same months of 2009, net pork exports were 14.6 per cent of production.

Pork product prices were pushed down to a about $56 per cwt of carcass, which pushed packers' margins deep into red territory on Wednesday afternoon. For the week through Thursday, the cutout at $56.26 per cwt was down $3.06 per cwt from a week earlier. Loins at $76.48 per cwt were up $1.07 per cwt, Boston butts at $60.54 per cwt were up $3.70 per cwt, hams at $40.11 per cwt were down $10.99 per cwt and bellies at $64.76 per cwt were down $3.22 per cwt from a week earlier.

Live hog prices Friday morning were $2-3 per cwt higher compared to seven days earlier. Weighted average negotiated carcass prices were $0.32-$1.19 per cwt higher compared to a week earlier.

The top live prices Friday morning for select markets were: Peoria $36.00 per cwt, Zumbrota, Minnesota, N/A and interior Missouri 41.00 per cwt. The weighted average negotiated carcass prices by area were: western Cornbelt $57.12 per cwt, eastern Cornbelt $55.69 per cwt, Iowa-Minnesota $56.76 per cwt and nation $55.97 per cwt.

Feeder pig prices this week at United Tel-O-Auction were up to $15 per cwt above two weeks earlier. All of the United pigs weighed in the 50-60 pound category and sold from $101-126 per cwt.

Slaughter this week under Federal Inspection was estimated at 2325 thousand head, down 3.9 per cent from 12 months earlier.