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Slaughter continues ahead of expectations

by 5m Editor
18 October 2003, at 12:00am

US Weekly Hog Outlook, 17th October 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

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Slaughter this week continued to run above expectations. USDA estimated Federally Inspected slaughter this week at 2118 thousand head - up 4.6 percent from the same week in 2002. Slaughter for the first 3 weeks ending in October at 6251 thousand head - up 3.6 percent from a year earlier and a record high for these 3 weeks.

If we continue to run slaughter above last year through the remainder of the year as much above 2002 as have the first 3 weeks of October, the fourth quarter slaughter will set a new record high at 27.677 million head --- 0.3 percent above 1998.

With weights in Iowa-Minnesota at 4.5 pounds above last year for week ending October 11 pork production for the first 3 weeks ending in October may be up as much as 5 percent from last year.

Prices for wholesale pork products this week were mixed from last week but the total carcass was higher this Friday than last week. Loins with 1/4" trim last Friday at $104.50 per cwt were up $4.50 per cwt, boston butts at $80.22 per cwt --- up $10.22 per cwt, 17-20# hams at $58.50 per cwt - up $3.50 per cwt and 12-14# bellies at $82.50 per cwt - down $4.50 per cwt with all prices compared to 7 days earlier. We may be getting substantial help from the yield 3 choice beef at above $200 per cwt in the box. Select yield 2-3 beef at noon this Friday was at $178.84 per cwt wholesale --- up $33.50 per cwt from a week earlier.

How high beef prices will go is completely unpredictable at the current time. However, the odds are very high that the beef prices will continue very strong through at least the remainder of 2003. Therefore, it is impossible for demand for pork to be strong enough to hold hog prices near current levels through the remainder of the year if we do not run into hog slaughter capacity problems. In fact, some strength is not impossible for hog prices through the next two-plus months with no problems with slaughter capacity. With slaughter capacity problems, cash hog prices will likely be depressed sharply for at least a few days.

Due to the extremely high beef prices and some more slaughter capacity than in 1998, it is possible we will escape big price problems this fall and early winter even with slaughter above 1998.

Cash hog prices at terminal markets this Friday morning were $0.75 higher to $0.75 lower compared to 7 days earlier. Top prices this Friday morning at select markets were: Peoria $36 per cwt, St. Paul $37, Sioux Falls $37.25 and Interior Missouri $34.75.

Average weighted prices for 185# carcasses with 0.9 - 1.1" back fat 6 square inch loin 2" deep were $0.16 higher to $0.60 lower this Friday morning compared to 7 days earlier. The weighted average carcass prices by area were: western Cornbelt $52.53 per cwt, eastern Cornbelt $51.89, nation $52.18 and Iowa-Minnesota $52.23.

Cash feeder pig prices this week at United tel-o-auction were up to $10 per cwt lower than two weeks earlier. The price ranges for different weight groups were: 40-50# $72-82 per cwt, 60-70# $66.50 and 70-80# $66.50.

5m Editor