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Weekly Review: Cutout Prices Lowered Yet Again

by 5m Editor
4 October 2008, at 7:34am

US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

The September 1, Hogs and Pigs Report came in very close to the average of the trade estimates. USDA estimate of the total number of hogs and pigs was 102 percent of a year earlier. The trade estimate was 102.1 percent. USDA estimate of the breeding herd was 97.4 percent of 12 months earlier and the trade estimate was 97.3 percent of 2007. The market herd estimate was the same for both at 102.5 percent.

The futures market on Monday ended the day with the nearby October and December contracts down $1 per cwt or more and practically all of the contracts for the next year were down at least a little.

Our estimate for the fourth quarter slaughter at 31 million head commercial is up about two percent. We have adjusted the slaughter estimate from the heavier weight market inventories down about 1.5 percent due to expected fewer slaughter hog imports from Canada.

Total commercial hog slaughter in 2008 is expected to exceed 117 million head, up nearly 7.5 percent from the previous record high slaughter in 2007. Slaughter in the first quarter of 2009 is forecast to be down a littler over two percent based on the light weight market inventories. The second quarter 2009 slaughter, based on farrowing inventories, show a decline of five percent. We are a little apprehensive that this much decline will occur. This feeling is reinforced by the farrowing inventories for the first quarter of 2009 being down only about three percent.

It now looks like slaughter will be down enough in the second and third quarter of 2009 for prices to be at or above the cost of hog production for the average cost producer. This is assuming we do not lose a bunch of demand and we have a near normal corn crop developing in 2009.

Live weights of barrow and gilts in Iowa and Minnesota for the week ending September 27, was up 1.6 pounds from a week earlier but still 2.7 pounds below a year earlier. However, for the week ending September 20, barrow and gilt carcass weights at 195 were only down one pound from a year earlier.

Pork product cutout was pushed lower again this week with the cutout at $73.14 per cwt of carcass down $1.11 per cwt from a week earlier on Thursday afternoon.

Loin prices at $91.44 per cwt were up $1.10 per cwt, Boston butts at $71.13 per cwt were down $1.92 per cwt, hams at $63.38 per cwt were down $4.96 per cwt and bellies at $82.47 per cwt were up $0.12 per cwt from a week earlier.

Live hog prices Friday morning were $0.75 higher to $1.00 per cwt lower compared to seven days earlier. Weighted average negotiated carcass prices Friday morning were $0.76 to $0.04 per cwt lower compared to Friday last week.

The prices for live hogs at select markets Friday morning were: Peoria $45.56 per cwt, Zumbrota, Minnesota, $48.00 per cwt and interior Missouri $48.25 per cwt.

The negotiated weighted average carcass prices by areas for Friday morning were: western Cornbelt $67.69 per cwt, eastern Cornbelt $66.39 per cwt, Iowa-Minnesota $67.54 per cwt and nation $66.90 per cwt.

Slaughter this week under Federal Inspection was estimated at 2323 thousand head up 0.6 percent from a year earlier.

5m Editor