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Hog Outlook: Large Pork Exports, Higher Feed Prices

Published on 27 October, 2006, Last updated at 11:09 GMT

By Glenn Grimes and Ron Plain

The average live weight for barrows and gilts last week in Iowa-Minnesota was 1.1 pounds below a year earlier.

Most of the year weights have been above last year. Is it possible that producers are reacting quickly to the higher feed prices? Certainly with near $3.00 per bushel corn and a high probability that hog prices will move lower seasonally, moving hogs to market at a little lighter weights should be a win-win situation.

The demand for pork at the consumer level for January-September showed a loss of 5.3% from a year earlier based on preliminary data. The good news continues to be demand at the live hog level -- down only 0.8% from the very strong demand of 2005.

The more positive condition for live hog demand than pork demand is due mostly to larger pork exports and smaller pork imports. Even though pork production for January-September was up 1.5% from last year, per capita supplies of pork for these nine months are down about 1.5% from 12 months earlier. In other words, foreign trade has more than used the growth in pork production in the U.S. so far in 2006.

Both gilt and sow slaughter has been larger than a year earlier since the beginning of September. This data indicated producers are not building the breeding herd very much, if any.

The prospects of increasing the cost of producing hogs $6-8 per cwt is due to the higher corn prices. In fact, if corn prices hold the current level as we move through 2007, the average-cost producer will likely move into red ink in the first half of 2007. The odds are high that the hog industry will need to downsize in the next several years to maintain profitability.

We understand the supply of feeder pigs available is quite large and prices are under pressure. The United Tel-o-Auction feeder pig sale this week showed prices near two weeks earlier. The prices by weights were: 40-50 pounds $87.00 per cwt, 50-60 pounds $80-81 per cwt, 60-70 pounds $76 per cwt and 70-80 pounds $80 per cwt.

Hog prices held quite well this week as producers marketed a record high number of hogs. Top live prices this Friday morning were $1.00-$2.50 per cwt higher compared to a week earlier. The weighted average negotiated carcass prices this Friday morning were $1.56-$1.82 higher compared to 7 days earlier.

The prices live for select markets were: Peoria $41.00 per cwt, St. Paul $43.50 per cwt, Sioux Falls was unavailable and interior Missouri $42.75 per cwt. The negotiated weighted carcass prices by area Friday morning were: western Cornbelt $61.91 per cwt, eastern Cornbelt $61.57 per cwt, Iowa-Minnesota $62.16 per cwt and nation $61.70 per cwt.

Pork product prices this Thursday afternoon were up $1.43 per cwt at $67.06 per cwt compared to a week earlier.

Slaughter this week under Federal Inspection was estimated at 2182 thousand head, up 1.4% from a year earlier.


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