On Thursday (16 June), the US senate voted 73 to 27 to end the 45 cent per gallon tax credit for blending ethanol with gasoline and the 54 cent per gallon tariff on importing ethanol. This change is far from being law, but it has the potential to give the livestock industry some relief from record high feed costs. The July corn futures contract lost 87 cents this week to settle at $7.00 per bushel on Friday (17 June).

The average retail price of pork in May was $3.484 per pound, up 10.7 cents from April, up 44.1 cents from May 2010, and record high for the second consecutive month. Bacon prices continue to be outstanding. The average retail price of bacon in May, $4.77 per lb, was up 10.8 cents from April and 90.8 cents higher than a year earlier. The key factor driving grocery store pork prices higher is a declining per-capita pork supply. This year's US supply is expected to be the smallest since 1978. On average, retail pork prices peak around Labor Day. However, given the weak economy, it appears unlikely retail pork prices have much more upside potential.

The average live price for 51-52 per cent lean hogs in May was $68.41 per cwt, up 31 cents from April and $5.28 higher than in May 2010. This is the highest monthly average ever for this USDA data series, which began in 1996.

Cash hog prices were higher this week. The national average negotiated carcass price for direct delivered hogs on the morning report on 17 June was $92.23 per cwt, up $3.98 from a week earlier. The Friday morning price report for the western corn belt was $92.82 per cwt. Iowa-Minnesota averaged $92.96 per cwt. The eastern corn belt averaged $92.02. Friday's top live hog price at Peoria was $63. Zumbrota's top was $64 per cwt. The top for interior Missouri hogs was $64.50 per cwt, $3 higher than the previous Friday.

The pork cut-out value rose for the second week in a row. USDA's Thursday afternoon calculated pork cut-out value was $92.81 per cwt, up $2.10 from the previous Thursday. Bellies and butts were higher; loins and hams slightly lower. Packer margins continue to be tight. On average, the hog carcass base price averages 92 per cent of pork cut-out. This morning's national average hog carcass price equalled 99 per cent of the pork cut-out value.

Hog slaughter totalled 1.973 million head this week, down 1.3 per cent from last week and down 1.5 per cent from the same week last year. Barrow and gilt carcass weights for the week ending 4 June averaged 203 pounds, up one pound from a week earlier and one pound heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 268.6 pounds, down 2.0 pounds from the week before and down 2.4 pounds compared to the same week last year. This is biggest week-to-week weight drop since a 3.6-pound decline for the week ending on 27 June 2009.

The July lean hog futures contract ended the week at $95.65 per cwt, up $2.43 from the previous Friday. The August contract settled Friday at $94.85 per cwt, up $2.03 for the week. October hogs settled at $87.90.