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Slaughter the last two weeks were not as hoped

by 5m Editor
15 November 2003, at 12:00am

US Weekly Hog Outlook, 14th November 2003 - Weekly review of the US hog industry, written by Glen Grimes and Ron Plain.

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Ron Plain
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The week ending November 1 slaughter was close to expectations based on the September report. However, slaughter the last two weeks were not as hoped. The last two weeks slaughter was over 3% above last year and at least 3% above expectations.

Increased slaughter imports since the first of September have added about 1.4% to our slaughter, but slaughter since the first of October has run between 2.5% - 3% above last year. The September report indicated slaughter would be below last year. The miss is between 2% and 3% of slaughter.

Again one does not make many brownie points by telling hog producers that things could be worse than they are. Slaughter 2.5% -3% above last year since the first of October and prices in October this year for hogs were over $5.00 per cwt above 12 months earlier.

We believe the probabilities are very high that we are now getting some demand pull for pork form the very high beef prices. In September wholesale choice beef prices were 23% above January beef select wholesale prices were only 6% higher than 9 months earlier. However, by October choice beef prices were nearly 40% above January and select wholesale price were over 27% above January. So the odds are high that the beef supply that is most competitive with pork did not show a big increase until October.

The data does not support the belief that retailers were keeping pork prices high so they would have good margins for pork to offset low beef margins. Based on USDA data for September the processor and retailer margin was about 9% below a year earlier.

Most of the nearly $15 per cwt higher live hog prices in September of 2003 than 2002 came from squeezed market margin. The producer's share of the consumer dollar in September this year were 27% in 2002 the farmer's share in September was 18.2%.

We certainly hope the data for cull sows and boars imports from Canada are incorrect. If not, sow slaughter in July through October from domestic production has been nearly 17.5% below a year earlier.

Our gilt slaughter sample also shows a smaller percent of gilts have been slaughtered for these 4 months than last year. Because we do not know of anyone growing the sow herd at the present time it gives us some hope that the data has errors in it.

Cash hog prices were mixed this week with the interior carcass prices from last week down $0.32 to 5.22. Terminal markets were from $0.50 to 1.50 lower this Friday than a week earlier.

The live top prices at select markets were: Peoria $32, St. Paul $33.50, Sioux Falls $35, and Interim Missouri $30.25.

The average price per cwt for the 185# carcass with 0.9 - 1.1" back fat, 6 sq. inch loin 2" deep by area were; western Cornbelt $44.80, Eastern Cornbelt $45.56, Iowa-Minnesota $48.46 and nation $45.24.

Slaughter this week under Federal Inspection was estimated at 2104 thousand head - up 3.7% from the same week in 2002. Feeder pig prices this week at united tel-o-auction were basically steady with 2 weeks earlier. The prices by weight groups at united were: 40-50# &60.50 per cwt, 50-60# $65.00, and 60-70# $56-$65.50. Those prices are above $20 per cwt above a year earlier.

5m Editor