Ron Plain

Pork exports for May were up 11.3% from a year earlier and the second largest monthly exports of record. For January - May, pork exports were up 15.3% from twelve months earlier.

This 15.3% export growth was with our number one customer, Japan, down 9.5% from 2005. Canada was up 6.3%; Mexico, up 30.1%, Russia, up 151.7%; South Korea, up 59.4%; China, mainland and Hong Kong, up 25.4%; Taiwan, up 54.7%; Caribbean, up 74.8%; and others, down 0.1%.

Pork imports for May were down 4.3%, but for January - May, were up 3.5%. Net pork exports for January - May were at 10.23% of production, with exports at 15.09% of production and imports at 4.86% of production.

Sow slaughter recently has been up substantially from a year earlier. If the weekly live animal import from Canada is correct, slaughter of sows from the domestic herd was up 11.1% for the week ending July 1 and was up 10% for the four weeks ending July 1 and was up 10% for the four weeks ending July 1, after adjusting for the size of the breeding herd.

We can only speculate why we have this much increase in sow slaughter. Two possibilities would be that some producers could have decided now is a good time to depopulate-repopulate because of disease problems. Also, producers who are about ready to retire or at least exit the hog business may have decided now is a good time to execute these plans. Certainly, unless we are bailed out with demand growth again, hog profits the next couple of years will turn to red, especially if we have a short corn crop that would increase costs substantially.

In fact, if I were a hog producer, I would develop plans to protect myself from $5.00 per bushel corn by buying options out-of-the-money that would set a ceiling. I would have to pay for corn in low $3.00 per bushel area.

With the growth in ethanol production that is now planned in the next few years, any kind of short corn crop would mean $5.00 or higher corn prices. With crude oil prices and government programs, ethanol plants can pay $8.00 to $9.00 per bushel for corn and still break even.

Hog slaughter the last two weeks is disturbing. Last week, the preliminary data showed a 4.5% increase in slaughter and this week's estimate at 1969 thousand head is up 5.4% from a year earlier. This week's increase is with the hottest weather of the year.

Pork product prices this Thursday afternoon were down by $3.52 per cwt, compared to a week earlier, but is holding up quite well with the last two week's slaughter levels.

These two weeks' slaughter has storm clouds waving because it suggests the potential that slaughter through the remainder of the year may be larger than expected based on the June Hogs and Pigs.

Cash hog prices strengthened this week in the face of the large slaughter. Live prices this Friday morning were up $0.50 to $4.00 per cwt compared to seven days earlier. Weighted average carcass prices by area were up $0.03 to $1.48 per cwt compared to a week earlier.

The top live prices for select markets Friday morning were: Peoria $45.50 per cwt, St. Paul $50.00 per cwt, and interior Missouri $48.75 per cwt. The weighted average carcass prices Friday morning were: western Cornbelt $68.73 per cwt, eastern Cornbelt $68.36 per cwt, Iowa-Minnesota $68.78 per cwt, and nation $68.59 per cwt.

Pork carcass cutout values were pushed lower this week with the big slaughter. The cutout this Thursday afternoon was $72.44 per cwt, down $3.52 per cwt from a week earlier.

Feeder pig prices at United Tel-O-Auction this week were steady to $10.00 per cwt below two weeks earlier. The range in prices by weight groups at United were: 40-50 pounds $93.00 per cwt, 50-60 pounds $79.00 to $91.00 per cwt, and 60-70 pounds $83.00 per cwt.

ThePigSite News Desk