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A Year of Growth in Live Hog Demand

by 5m Editor
28 July 2007, at 7:22am

US Weekly Hog Outlook, 28th July 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

Retail pork prices in June were up 1.2 percent from May and were at a record high. Retail pork prices for January - June were up 2.0 percent from a year earlier.

All of the increase in retail pork prices, plus some, was bid into live hog prices for January - June. Live hog prices were up 8.3 percent from 12 months earlier.

The demand for pork at the consumer level for January - June was up 0.3 percent from the same period in 2006. Live hog demand for the first six months of 2007 was up 2.9 percent from the same months in 2006. The stronger live hog demand was due to the higher retail prices and a slightly smaller marketing margin this year than last year.

We have now had 12 months of growth in live hog demand following 14 months of demand losses. A significant portion of the demand growth in recent years has been driven in part by pork exports, but that is not true for the first six months of 2007. For January - May, pork exports in pounds were down 2.9 percent from last year, but the value was up about six percent from a year earlier. Therefore, a bit of the demand growth for live hogs this year may be exports.

USDA is now forecasting that pork exports in tonnage will be down a little this year from 2006. However, if some of the rumors about China being in the market for a substantial quantity of pork, it may make 2007 the sixteenth consecutive year for record pork exports. But remember, this is just a rumor at the present time, even though the futures market for lean hogs has been influenced by these rumors in recent days and are offering a good price for the next year.

Cold storage stocks of pork on June 30, 2007, were up 14 percent from a year earlier but down 4 percent from a month earlier. A significant portion of the growth in cold storage stocks of pork on June 30 was due to hams, which were up 53 percent from a year earlier.

Beef storage stocks on June 30 were down a little at 96 percent of the same date in 2006. Chicken cold storage stocks at the end of June were down 4 percent from a year earlier.

The average live weight for barrows and gilts in Iowa-Minnesota at 263.0 pounds was down 0.3 pound from a week earlier but up 2.0 pounds per head from a year earlier. The average live weights of barrows and gilts in Iowa-Minnesota has averaged 0.8 pound per head above a year earlier. For the eight-week period from week-ending April 8 to week-ending May 27, the average live weights of barrows and gilts averaged 1.3 pounds per head below 12 months earlier. It now appears the lighter hog weights for most of last year were probably due to circovirus and not the high feed prices.

Pork cutout values this Thursday afternoon at $74.32 per cwt of carcass were down $1.82 per cwt from a week earlier. Loins were down $0.32 per cwt at $91.54 per cwt, Boston butts at $73.64 per cwt were down $1.53 per cwt, hams were down $3.06 per cwt at $60.07 per cwt, and bellies at $97.56 per cwt were down $5.92 per cwt from seven days earlier.

Live hog prices Friday morning were $0.50-2.75 per cwt higher compared to a week earlier. The weighted average carcass price for negotiated hogs Friday morning was $2.56-2.66 per cwt higher compared to seven days earlier.

The top live prices Friday morning for select markets were: Peoria $47 per cwt, St. Paul $50.50 per cwt and interior Missouri $50.25 per cwt. The weighted average carcass prices for negotiated hogs Friday morning were: western Cornbelt $70.90 per cwt, eastern Cornbelt $67.76 per cwt, Iowa-Minnesota $71.12 per cwt and nation $69.29 per cwt.

Slaughter this week under Federal Inspection was estimated at 1,977 thousand head, up 4.2 percent from a year earlier.

5m Editor