The Saskatchewan Ministry of Agriculture released its August Hog Market Update last week.

Livestock market analyst Godwin Pon observes, for the month of July US slaughter numbers were down by about five per cent from the same time last year to approximately 1.9 million head per week while in Canada slaughter numbers have fallen by about six percent from 2009 tightening the supply of market hogs.

Godwin Pon-Saskatchewan Ministry of Agriculture

Prices for live hogs have been increasing mostly due to declining supplies attributed to industry led herd reductions.

Generally speaking beginning May 2010 prices of live hogs began to improve.

In early May Iowa carcass price averaged about 85 dollars US per hundredweight and SPI index 100 ranged between 157 to 167 per 100 kilograms.

These prices have been fairly constant through the summer.

For example the week ending 7 August Iowa carcass price were about 82.29 per hundredweight and signature three prices were 154.22.

This is a significant improvement over last year's prices where during the same week Iowa carcass price was 50.09 per hundredweight.

I think what we're seeing is tight animal supplies forcing processors to bid more aggressively.

Generally speaking producer profitability has improved.

At these hog prices we expect most hog producers to be at least breaking even if not making a small profit though any profits being made right now will go towards covering past losses and rebuilding equity in their operations.

Mr Pon notes at the beginning of June US frozen pork supplies fell about eight per cent, the fourth consecutive month that pork supplies declined and stocks are down 29 percent from one year ago.

He suggests producers should continue to monitor trends in hog and pork markets and input costs and he recommends exploring forward pricing opportunities to ensure continued profitability.