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Hog Prices Under Pressure

by 5m Editor
7 July 2007, at 7:50am

US Weekly Hog Outlook, 7th July 2007 - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

The June 1 Hogs and Pigs report came in close to but a little higher than trade expectations. The futures market on Monday came in mostly lower at the bell. One contract, December 2007, came in $0.37 per cwt higher but most other contracts were from $0.25 to $0.80 per cwt lower at the close on Monday.

The total herd was up 1.7 percent, the market herd was up 1.8 percent and the breeding herd was up 0.9 percent based on USDA on June 1.

Slaughter during June was up about four percent on a daily basis. The report showed the 180-pounds-and-heavier market inventory up three percent.

The market hog inventories indicate slaughter in the third quarter will be up about 1.4 percent and the fourth quarter up 1.8 percent from last year. Due to the likelihood that slaughter imports from Canada will be larger this year for this period than in 2006, as well as possibly less death loss from circovirus, we expect slaughter to be about one percentage point higher than indicated by the inventories.

The farrowing intentions for the third and fourth quarters of 2007 indicate that first half slaughter will be larger than a year earlier.

Hog producers received good news Friday of last week. According to USDA, corn producers have planted 92.89 million acres to corn. This is up 2.43 million acres from the March intentions of 90.45 million acres and up 14.56 million acres from the planted acres in 2006. With a normal yield of corn this year, corn prices in the first half of 2008 may be less or no higher than the first half of 2007. The futures prices at close last Friday ranged from $3.64 to $3.95 per bushel for 2008.

Some of the good news about corn was offset by the acreage report on soybean plantings at 64.1 million acres, down 15 percent from last year. This probably means higher soybean meal prices than we would have had with the March intentions.

Hog prices came under pressure this week with the short-week slaughter and lower cutout values. The top cash prices Friday morning were $1 to $2 lower compared to a week earlier. Weighted average negotiated carcass prices were $1.74 to $4.63 lower compared to seven days earlier.

The top prices for Friday morning at select markets were: Peoria $47 per cwt, St. Paul $48 per cwt and interior Missouri $50.50 per cwt. The weighted average negotiated carcass prices by geographic areas were: western Cornbelt $68.41 per cwt, eastern Cornbelt $67.09 per cwt, Iowa-Minnesota $68.59 per cwt and nation $67.82 per cwt.

The cutout per cwt of carcass Thursday afternoon at $72.31 per cwt was down $1.87 per cwt for the week. Loins were down $0.79 per cwt at $88.50 per cwt, Boston butts at $75.41 per cwt were down $3.67 per cwt, hams were down $1.19 per cwt at $56.03 per cwt, and bellies at $98.30 per cwt were down $0.18 per cwt from seven days earlier.

Unless we can get stronger live-hog demand, we probably had the high in prices for 2007 a couple of weeks ago.

Feeder pig prices at United Tel-O-Auction this week were mixed from two weeks earlier, both higher and lower for the same weight pigs. The average price for this week was believed to be about the same as two weeks earlier. All of the pigs this week weighing between 50 and 60 pounds sold from $73.50-101 per cwt.

Slaughter this week under Federal Inspection was estimated at 1,650 thousand head, up 1.8 percent from last year.

Barrow and gilt live weights for Iowa-Minnesota dropped below a week earlier by 1.4 pounds last week and 0.2 pound below a year earlier. For the four weeks prior to last week, barrow and gilt live weights were above last year for Iowa-Minnesota.

5m Editor