Hog Outlook: Growing Unemployment Threatens Pork Industry

5 November 2012, at 2:23pm

US - The unemployment rate inched up from 7.8 per cent in September to 7.9 per cent in October. That's not the right direction to boost meat demand, writes Ron Plain and Scott Brown, University of Missouri.

Along with a lot of other business, Hurricane Sandy disrupted hog movement on the east coast this week.

Sow slaughter is not what it used to be. As the number of pigs produced per litter has gone up, sows' share of total hog slaughter has gone down. Prior to 1985, sows made up over five per cent of federally inspected hog slaughter. Prior to 1995, sows made up over four per cent of hog slaughter. Prior to 2009, sows were more than three per cent of hog slaughter. Last year, sows were 2.75 per cent of hog slaughter. Through October, only 2.7 per cent of 2012 hog slaughter has been sows. As the share has declined, the relationship between sow price and barrow and gilt price has become more erratic. The demand for sows is primarily for whole hog sausage. In 2010, the average price of 450-500 pound sows was higher than the average for barrows and gilts, on a liveweight basis. Thus far in 2012, sow prices are averaging only 80 per cent of barrows and gilts.

On Thursday afternoon the calculated pork cutout value was $85.66/cwt, down a penny from the previous Thursday and down $7.87 from a year ago. This week loins and butt prices were lower. Hams and bellies were higher.

Hog prices ended the week lower. The national average negotiated carcass price for direct delivered hogs on the morning report today was $78.82/cwt, down 68 cents from last Friday. The eastern corn belt averaged $78.13/cwt on the morning report today. The western corn belt averaged $80.04 and Iowa-Minnesota was a penny higher at $80.05/cwt. Peoria had a top live price this morning of $54/cwt. Zumbrota, MN topped at $57/cwt. The price top for interior Missouri live hogs was $57.75/cwt, down 75 cents from the previous Friday. This morning's hog price is 92 per cent of pork cutout value.

Hog slaughter this week totaled 2.359 million head, down 0.8 per cent from the week before, but up 0.4 per cent compared to the same week last year. Year-to-date hog slaughter is up 2.0 per cent and pork production is up 2.3 per cent.

The average barrow and gilt live weight in Iowa-Minnesota last week was 272.8 pounds, up 1.1 pounds from a week earlier, but down 0.7 pound from a year ago. This was the fifth consecutive week with lighter weights than a year ago.

Hog futures were lower this week. Friday's close for the December lean hog futures contract was $77.75/cwt, down $1.15 from the previous Friday. February hog futures ended the week 55 cents lower at $83.90/cwt. April hogs settled at $89.47/cwt, June at $99.77/cwt.