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Weekly Review: Hogs and Pigs Report Mixed

by 5m Editor
4 April 2009, at 7:57am

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

Corn producers plan to plant 85 million acres this year, down one percent from 2008 but still the third largest acreage planted to corn since 1949. Soybean acreage in 2009 is expected to be 76 million acres, up slightly from 2008 and the largest of record.

The futures market responded by increasing from $0.14-0.18 per bushel for corn on Tuesday. Soybeans showed increases of $0.44-0.52 per bushel at the close Tuesday.

The 1 March Hogs and Pigs Report came in mixed compared to trade estimates. The breeding herd was down 3.1 per cent and the trade estimate was for a decline of 2.1 per cent. The market herd and total herd were down 2.7 per cent based on the USDA estimate. The trade estimate was for the market herd to be down 3.2 per cent and the total herd down 3.1 per cent.

March slaughter on a daily basis from domestic production was down 1.7 per cent, and the 180-pounds-and-heavier market hog inventory was down 2.4 per cent. So, slaughter was somewhat larger in March than indicated by the report. Our gilt and sow slaughter data indicated the breeding herd down about two percent from last year, but the difference of one percentage point is well within the potential sample error of both sets of data.

The bottom line is that the breeding herd needs to be reduced more, possibly five to seven percent, to get supplies in line with demand which gives a price that will produce a profit for the industry.

Even though slaughter this year is expected to be about four percent below the 2008 level, expected prices are about the same due to a lower live hog demand due to smaller exports of pork.

For the second quarter of 2009, we expect 51-52 percent lean live basis to average between $48-52 per cwt. In this quarter in 2008, the average was $52.51 per cwt. For the third quarter, we expect 51-52 percent lean hogs natural basis to average between $51-55 per cwt. The average for the quarter in 2008 was $57.27 per cwt. For the last calendar quarter of this year, we expect 51-52 percent lean hogs to average between $44-48 per cwt.

Slaughter weights continue to run above a year earlier. For the week ending March 28, barrows and gilts in Iowa-Minnesota averaged 269.5 pounds per head, the same as a week earlier and up 1.7 pounds per head from a year earlier. Carcass weights for barrows and gilts for the week ending March 21 were at 202 pounds per head, up two pounds from a year earlier.

The live prices for barrows and gilts Friday morning were steady to $1.50 per cwt higher compared to a week earlier. The weighted average negotiated prices for Friday morning were $0.61-0.92 per cwt higher compared to seven days earlier.

The top live prices Friday morning for select markets were: Peoria $35 per cwt, Zumbrota, Minnesota, $38 per cwt and interior Missouri $40.25 per cwt. The weighted average negotiated carcass prices by areas Friday morning were: western Cornbelt $57.41 per cwt, eastern Cornbelt $54.37 per cwt, Iowa-Minnesota $57.67 per cwt and nation $55.75 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,164 thousand head, down 5.2 percent from a year earlier.

Pork product prices continue to struggle in the 50s with the cutout per cwt of carcass Thursday afternoon at $56.13 per cwt, down $1.15 per cwt from a week earlier.