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Weekly Review: Hogs and Pigs Report Bullish

by 5m Editor
3 October 2009, at 2:28pm

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

The September Hogs and Pigs report came in a little more bullish than the trade estimates. Total number of hogs and pigs was down 2.3 per cent, kept for breeding was down 3.1 per cent according to USDA, and the market inventory was down 2.2 per cent. The futures market responded by showing relatively small gains both Monday and Tuesday.

USDA revised upward their estimate of the number of litters farrowed during December to February 2009 by 1.5 per cent and the pig crop for those months by 1.6 per cent. This brought the June market hog inventory more in line with summer hog slaughters. USDA revised upward the 60 to 170 pound market inventories in June by 0.7 per cent in the September report.

In recent reports, the USDA has estimated the number a little below the trade estimate but actual marketings on average have been above trade estimates. We must remember the USDA estimates are based on a sample and the trade estimates are based on other statistics and opinions. Therefore, both estimates are subject to error. We certainly hope the USDA's September estimates are the correct ones.

Our domestic demand index for pork for January to August was up 3.9 per cent at the consumer level, but live hog demand was down 4.7 per cent for these eight months compared to a year earlier. The weaker live hog demand than consumer demand was due to the 20 per cent smaller exports in 2009 than 2008.

Pork product cutout this week on Thursday afternoon at $54.33 per cwt was up $0.70 per cwt from a week earlier. Loins at $68.51 per cwt were down $1.15 per cwt, Boston butts at $50.40 per cwt were down $2.16 per cwt, hams at $48.46 per cwt were up $5.60 per cwt and bellies at $66.36 per cwt were down $1.47 per cwt compared to seven days earlier.

Feeder pig prices were $3.00 to $6.00 per head higher again last week. This is the third consecutive week with good gains in feeder pig prices. The average price for 50 to 54 per cent lean 10-pound pigs was $25.89 per head. The average for 50 to 54 per cent lean 40-pound pigs was $28.30 per head. The formula price for 10-pound pigs was $33.12 per head, and the formula price for 40-pound pigs was $39.31 per head. The cash or negotiated price for 10-pound pigs was $23.29 per head and 40-pound pigs was $27.43 per head.

Live barrow and gilt weights in Iowa-Minnesota last week at 268.5 pounds were up 0.3 pound from a week earlier and up 3.9 pounds from a year earlier.

It is believed that a substantial portion of the heavier weights this summer has been due to the cooler than normal temperatures in July and August. If so, we will continue to get weights closer to a year earlier as we go through the fall but weights are likely to continue some above a year earlier.

Unless we can get substantial growth in demand for live hogs, the red ink being experienced by producers will likely continue on average through 2010.

Live hog prices Friday morning were $0.75 lower to $1 pet cwt higher compared to a week earlier. Weighted average negotiated carcass prices Friday morning were $0.31-2.03 per cwt lower compared to seven days earlier.

The top live prices Friday morning were Peoria $30 per cwt, Zumbrota, Minnesota, $32 per cwt and interior Missouri $35 per cwt.

The weighted average negotiated carcass prices Friday morning by area were western Cornbelt $48.39 per cwt, eastern Cornbelt $45.44 per cwt, Iowa-Minnesota $48.47 per cwt and nation $46.09 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,329 thousand head, up 0.1 per cent from a year earlier.