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Ron Plain

Despite this huge slaughter, live hog prices averaged close to $35.90/cwt, 20% more than during the fourth quarter of 2002.

Commercial hog slaughter during the first quarter of 2004 will total close to 25.7 million head, 4% more than during January-March 2003 and 0.5% more than in the first quarter of 1999, the previous record holder for first quarter slaughter. Despite this record slaughter, live hog prices averaged close to $44/cwt, 25% more than during the first quarter of last year and the highest for any January-March since 1997.

Hog slaughter records probably won't stop with these two quarters. USDA's latest hog inventory survey indicates there were 53.399 million market hogs in the U.S. on March 1. That's 2.4% more than a year earlier and the largest March market hog inventory since 1999. Given that the number of slaughter hogs being imported from Canada is running nearly 250 thousand head per quarter above the 1999 pace, there is a good chance that second and third quarter slaughter will both set new records. If so, we will have had four consecutive quarters with record slaughter. It currently looks like 2004 hog slaughter will easily exceed 103 million head. The current record is 101.544 million hogs slaughtered in 1999.

For hog producers, the important question is how much longer can we set records for slaughter and still have hog prices far higher than a year earlier. The fabulously strong demand that is making this unusual combination possible doesn't appear to be near an end. March 2004 hog prices were nearly 36% higher than 12 months earlier. Granted, daily hog slaughter was only up 1% compared to March 2003.

If we get the normal seasonal rally in price, June barrow and gilt prices will average $53.75/cwt on a live basis and over $72/cwt on a carcass basis. A safer forecast is that the spring rally in prices will be modest due to the record hog supply. Nor are higher prices in June a certainty. In both 1983 and 1994, hog prices were higher in March than June.