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Predictions indicate $40 hogs until late summer

by 5m Editor
22 March 2003, at 12:00am

US Weekly Hog Outlook, 21st March 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

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USDA will release the results of their next quarterly hog survey on March 28. Our calculations put the breeding herd at 96% of year-earlier levels and the market hog inventory at 99% of March 1, 2002. Our estimates have hog slaughter remaining at or above year-ago levels for another month then dropping below year-earlier levels and staying below year-ago levels into 2004. We expect spring farrowings will be down 3% and summer farrowings will be off 4% compared to last year. We expect pigs per litter to remain close to year-ago levels.

If we are close to right on our inventory estimates, then hog prices should rally back above breakeven levels by late May and stay in the low $40 (live weight) until late summer. We do not think the cutback has been large enough to prevent fall hog prices from dropping back below breakeven.

The average retail price of a pound of pork was $2.626 in February. That is 4.4 cents higher than in January but 9.1 cents lower than in February 2002. Don't get too depressed about being down 9 cents at retail compared to a year ago. At $2.626/pound, this was the second highest February price ever.

Hog prices have been fairly stable thus far in 2003, and this week was no exception with prices ending the week about where they started. On Friday, Peoria had the top live price at $36/cwt while both Sioux Falls and St Paul topped at $34.50/cwt. The interior Missouri market had a $34 top on Friday. The National weighted average carcass price Friday morning for negotiated hogs with 0.9-1.1" backfat, 6 sq. in. loins 2" deep was $48.07/cwt, $0.27 higher than last Friday. Regional prices on Friday morning were: eastern corn belt $48.17, western corn belt $47.98, and Iowa-Minnesota $48.11/cwt.

Pork product values were higher this week. At mid-day on Friday, 1/4-inch trim loins weighing less than 21 pounds were trading at 95.75 cents per pound, up 1.75 cents for the week. Boston butts gained 1.87 cents for the week to 56.87 cents per pound at midday on Friday. Ham prices were 3.4 cents higher at 58 cents per pound for 17-20# hams. 12-14 pound pork bellies gained 4 cents to end the week at 89 cents per pound.

Federally inspected hog slaughter for this week is 1.918 million head, up 0.7% from the same week last year. Year-to-date hog slaughter is up 2.3%. Year-to-date sow slaughter is up 3%. Since the sow herd is smaller than last year, sow slaughter as a percent of the sow herd is up 6.9% compared to the same period in 2002.

Slaughter weights remain close to year-ago levels. If 2003 yields a good corn crop and lower feed prices, we should fall slaughter weights well above those of last fall.

5m Editor