Hog Slaughter Down Compared to Same Week Last Year

US - This was another good week for hog prices. Barrow and gilt prices ended the week $1-3 higher than where they started, write Glenn Grimes and Ron Plain.
calendar icon 6 March 2010
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This week’s prices are the highest since September 2008 and are at or above breakeven for the average producer. The national weighted average carcass price for negotiated hogs Friday morning was $70.90/cwt, $2.89 higher than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $70.75, western corn belt $71.14, and Iowa-Minnesota $71.16/cwt. The top hog price Friday at Sioux Falls was $52/cwt, up $1 from the previous Friday. Zumbrota, MN had a top price of $49 on Friday and Peoria topped at $48/cwt. The interior Missouri live top Friday was $49/cwt, $1.50 higher than the previous Friday.

Using current futures prices for hog, corn and soybean meal along with historic basis, it looks like hog prices during March and April will average close to breakeven levels. Slaughter hog prices during May through September should be profitable. During the last three months of 2010, the futures market indicates hog prices will again dip below breakeven. The last profitable month for the typical hog producer was August 2008.

At USDA’s annual outlook forum, they predicted 2010 cost of production would be lower than last year and hog prices would be well above 2009, but not high enough to make this a profitable year. Like USDA, we are not as optimistic about 2010 hog prices as is the futures market.

This week’s hog slaughter is estimated to be 2.168 million head, down 2.6 per cent compared to the same week last year. Hog slaughter has been below year-earlier for each of the last 9 weeks. The combination of reduced slaughter and lighter weights has caused pork production to be down 6.9 per cent thus far in 2010.

The average carcass weight of barrows and gilts slaughtered the week ending 20 February was 201 pounds, up 1 pound from the week before, but down 1 pound from the same week last year. Iowa-Minnesota live weights last week averaged 269.2 pounds, up 1.7 pounds compared to a year earlier. The Iowa-Minnesota weight series has been heavy relative to the national carcass weight series for the last 10 weeks. Perhaps this reflects the concern about corn quality and rates of gain in the eastern cornbelt. We hear lots of reports about corn with high levels of mycotoxin due to the very wet fall weather.

USDA’s Thursday afternoon calculated cutout value was $75.91/cwt, up $3.72 from the previous Thursday and up $20.56 compared to the same day last year. Loins, bellies, boston butts and hams were all higher this week than last.

The April lean hog futures contract ended the week at $73.10/cwt, up 30 cents from last Friday. The May contract settled at $79.02, up $1.10 for the week. June closed the week at $81.87/cwt and July ended at $81.97/cwt.

March corn futures lost 13 cents this week and settled at $3.64’6 per bushel on Friday.

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