In last week’s letter, we stated that broiler production for the first quarter of 2006 was up 8.7 percent. This number is an error; the current estimate is for an increase of 4.6 percent, which is up from an average growth of 3.7 percent for the last three years.

The current data shows that the demand for broilers at consumer level was down only 0.5 percent for January-March compared to a year earlier. However, using the 12-city wholesale broiler price, the demand at the wholesale level appears to be down about 4 percent from a year earlier for January-March of 2006.

Since March, both gilt and sow slaughter has run above year-earlier levels on average. Therefore, we do not believe producers are changing the breeding herd very much in either direction.

Also there is good news in that Canada’s breeding herd on April 1 was down a little, and Canada’s total herd on April 1 was down 2.4 percent. This is due, we believe, mostly to larger shipments of feeder prigs to the U.S. this year than last year. Pigs in Canada on April 1 weighing less than 20 kilograms were down 5.7 percent from 12 months earlier.

Feeder pig prices at United Tel-o-auction this week were $5-7 per cwt. below two weeks earlier, at least for weights that could be compared. These prices for United by weight group were: 40-50 lb. $106.50-125.50 per cwt., 50-60 lb. $107-110.50 per cwt., and 60-70 lb. $100-102.50 per cwt.

The current futures market for lean hogs in October is offering a live price at best of about $40 when one considers basis. For the 60-70 pound pigs, this leaves about $40 per hog to cover the cost of adding 200 pounds.

The U.S. Food and Drug Administration has approved the use of Paylean for the finishing phase with no weight limits. We expect this to increase the average weight for market hogs as well as increase the average percent lean.

Hog prices were pushed higher this week as packers pushed slaughter above year-earlier levels.

The top live prices Friday morning were $2 to $4 per cwt. higher than a week earlier. Weighted average negotiated carcass prices were $2.12 to $5.09 per cwt. higher than seven days earlier.

The top live prices for select markets Friday morning were: Peoria $44 per cwt., St. Paul $49 per cwt., and interior Missouri $47 per cwt.

The weighted average negotiated carcass prices by area were: western Corn Belt $67.04 per cwt., eastern Corn Belt $64.96 per cwt., Iowa-Minnesota $67.21 per cwt. and nation $64.96 per cwt. Slaughter this week under Federal Inspection was estimated at 1,931,000 head, up 5.7 percent from a year earlier.

This farm news was published in the May 17, 2006 issue of Farm World.