Productivity growth in the U.S. swine herd grew during the year ending February 28, 2007, but at a slow rate. For the four years ending February 29, 2006, the average growth rate in the U.S. breeding herd was 2.53 percent annually. For the year ending in 2007, the growth rate was only 0.29 percent. For the five-year period ending February 28, 2007, the average annual growth rate was 2.08 percent.

Our current estimate of the June 1, 2007, Hogs and Pigs report is for the total herd to be up 2.3 percent, the market herd up 2.4 percent and the breeding heard up 0.9 percent from a year earlier.

It now looks like June slaughter this year may be up near 4 percent from a year earlier. 0.2 percent of that growth is an increase in slaughter hog imports from Canada. Slaughter for the last two weeks has been up between five and six percent. Slaughter for June was expected to be up about 1.5 percent based on the March Hogs and Pigs report.

Let us hope the reports that we picked up at World Pork Expo for slaughter this fall to be up two to four percent more than expected based on the March Hogs and Pigs due to more circovirus vaccine availability and less death loss due to the disease. That much increase in production will likely push hog prices into the upper $30s to low $40s for the fourth quarter even with a strong demand.

The live weight of barrows and gilts in Iowa and Minnesota declined by 1.3 pounds per head from a week earlier but was still 1.9 pounds above a year earlier at 264.4 pounds per head. This is the third consecutive week with weights in Iowa-Minnesota above a year earlier with a trend to larger amounts above 12 months earlier each week.

This trend to heavier weights above last year supports the belief that much of the decline in weights a year ago was due to circovirus.

Retail pork prices increased 2.2 percent in May compared to a month earlier. This was 3.9 percent above May 2006. For January - May, retail pork prices in 2007 were 1.6 percent above 12 months earlier.

All of the increase in retail prices, plus some, was bid into live hog prices, which were up 12.5 percent in May compared to April. For January - May live hog prices were up 10.3 percent from 2006. Based on data from USDA, the total marketing margin for January - May was down 1.4 percent from a year earlier. The packer margin was up 4.3 percent for this period, but the processor-retailer margin was down 2.7 percent from the same months in 2006.

The price of live hogs Friday morning was $3.75 to $5 per cwt higher compared to 7 days earlier. The weighted average price of negotiated carcasses Friday morning was $4.09 to $5.26 per cwt higher compared to a week earlier.

The top live prices Friday morning for select markets were: Peoria $50 per cwt, St. Paul $55 per cwt and interior Missouri $54.25 per cwt. The weighted average carcass prices of negotiated hogs Friday morning by geographic area were: Western Cornbelt $79 per cwt, Eastern Cornbelt $74.43 per cwt, Iowa-Minnesota $79.61 per cwt and nation $77.38.

Pork cutout held strong this week with the large slaughter. The cutout for Thursday afternoon at $78.46 per cwt was up $0.29 per cwt from a week earlier. Loin prices were down $1.00 per cwt at $95.13 per cwt Thursday afternoon. Boston butts at $83.78 per cwt were up $4.53 per cwt, hams were up $0.62 per cwt at $63.09 per cwt, and bellies were at $100.53 per cwt, down $1.98 per cwt from a week earlier.

Cash feeder pig prices were mixed this week with two weeks earlier, but visits with feeder pig sellers indicate that the process is getting pretty tough for pig sellers.

At United Tel-O-Auction this week pig prices by weight groups were: 40-50 pounds $98.50 per cwt, 50-60 pounds $73.50-88 per cwt. These prices in reality are quite strong with $4-per-bushel corn.

Slaughter this week under Federal Inspection was estimated at 1,932 thousand head, up 5.6 percent from a year earlier.