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2004 Pork production may be down 1-2% at most

by 5m Editor
12 July 2003, at 12:00am

US Weekly Hog Outlook, 11th July 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

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Additional analysis of the past 16-quarters' farrowing intentions shows that the last 4 June-August quarters show actual farrowings 0.55 percent larger than the intentions. However, for September-November, the last 4-years' actual farrowings have been on average 1.4 percent below the intentions.

If this year comes in at the average of the past four years each quarter, it would indicate farrowings down 1.5 percent in the June-August quarter and down 2.2 percent in the September-November quarter.

During the past 5 years, the average productivity growth from litter size and carcass weight has averaged about 1.4%. Assuming this much growth from litter size and weights for the third-and-fourth-quarter farrowings this year would result in pork production during January-March next year to be down 0.1 percent and pork production during April-June to be down 0.8 percent from this year.

If we do not continue reducing the breeding herd as we go through the last half of 2003, pork production for the last half of 2004 may be close to the last half of 2003 with average productivity growth of the last 5 years.

Productivity growth for the last 2 years ending May 31 has averaged 1.9 percent. For the 3 years ending May 31, 2001, productivity growth has averaged 2.8 percent.

The bottom line is that the probabilities are high for pork production in 2004 to be down at most 1-2 percent from 2003.

This level of pork production with no big change in pork demand would likely give negotiated base hog prices a U.S. basis of $40 per cwt or a little less and a $54 base carcass price U.S. basis.

This data adds strong support to the need to continue reducing the breeding herd during next year at about the same rate as the past 12 months.

If this occurs, we will have a good chance for base negotiated hog prices to average in the $42-44 level for 2004.

In our opinion, this much reduction is unlikely to occur unless several of the larger hog producing operators make some reductions.

Cash hog prices started out the week with strength, but the last half of the week with losses.

Live weight cash prices ended the week steady to $1.00 higher compared to last week end. Top live prices for select markets this Friday morning were: Peoria $42.00, St. Paul $41.00, Sioux Falls N/A and interior Missouri $40.00.

Average prices for a 185-pound carcass with 0.9-1.1 inches back fat, 6 square inch loin, 2 inches deep this Friday morning were: western Cornbelt $60.29, eastern Cornbelt $60.15, Iowa-Minnesota $60.36 and nation $60.22.

Slaughter this week was estimated at 1,789 thousand head---up 0.7 percent from the same week last year.

At this time, we cannot be sure whether we are finding more hogs than indicated by the June market inventories or still getting more slaughter hog imports from Canada. If slaughter next week is as large as last year for the same week, it will indicate more U.S. hogs than expected.

Feeder pig prices this week at United Tel-o-auction were a weak steady to $10 per cwt lower than 2 weeks ago.

Feeder pig prices for early-weaned pigs have dropped substantially in the last few days. People are probably not expecting as strong a slaughter market this fall as they were a few weeks ago.

The probabilities are still very high for pig prices this summer and fall to stay much better than in 2002.

5m Editor