September Hogs & Pigs Report 'Encouraging'

US - Although the key numbers in USDA's September Hogs and Pigs report were all very close to the pre-release trade forecasts, the report contained several encouraging items, writes Ron Plain.
calendar icon 2 October 2010
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At 5.77 million head, the swine breeding herd is 18,000 head smaller than it was in June and only 10,000 head above the record low set in March. Pigs per litter during June-August were only 1.1 per cent higher than last year. That is the smallest year-over-year increase for a quarter since December-February 2007. USDA had to revise down last winter's pig crop to bring it in line with summer slaughter.

USDA said the market hog inventory was down 2.7 per cent compared to 1 September 2009 and the swine breeding herd was down 1.8 per cent from a year ago. They forecast fall farrowings would be down 1.2 per cent and winter farrowings will be up 0.5 per cent.

Our prediction is that 2011 hog slaughter will be 0.7 per cent higher than this year and because of heavier weights 2011 pork production will be up 1 per cent. Look for the average hog price next year to be the same as this year despite the extra pork due to stronger meat demand.

USDA's Thursday afternoon calculated pork cutout value was $88.85/cwt, down 72 cents from the previous Thursday, but still $34.52 higher than a year ago. Loins and butts moved higher this week. Bellies were $11.45/cwt lower than last week. The end of BLT season is in sight.

The national weighted average carcass price for negotiated hogs Friday morning was $76.15/cwt, $3.80 lower than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $75.98, western corn belt $77.38, and Iowa-Minnesota $77.42/cwt. The top live hog prices Friday were $56.50 at Sioux Falls, and $54/cwt at both Zumbrota and Peoria. The interior Missouri live top Friday was $55/cwt, $1.50 lower than the previous Friday.

This week's hog slaughter totaled 2.191 million head, down 0.7 per cent from the week before and down 6.2 per cent compared to slaughter during the same week last year.

The average carcass weight of barrows and gilts slaughtered the week ending September 18 was 199 pounds, unchanged from the week before and even with a year ago. Iowa-Minnesota live weights last week averaged 269.8 pounds, up 0.9 pounds from the week before and 1.3 pounds heavier than a year earlier.

The October lean hog futures contract ended the week at $76.37/cwt, down $2.65 from the previous Friday. The December contract settled at $72.87 down $3.58 for the week. February closed the week $3.35 lower at $76.12/cwt.

USDA's September grain stocks report found a lot more corn than expected which pushed crop prices lower. The December corn contracted ended the week at $4.56'6, down 56 cents from the previous Friday. October soybean meal futures lost $27.50 this week to settle at $285.70/ton.

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