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Demand for pork continues weak at the consumer level
Hog Outlook
Glenn Grimes & Ron Plain
University of Missouri - Columbia

For January-July pork demand at the consumer level was down 5.4 percent from a year earlier. For the three-month period of May to July pork demand at the consumer level was down 5.1 percent, some better but not great.

Beef demand at the consumer level for January-July was down 4.6 percent - not quite as much as pork but still undesirable.

Live hog demand for January-July was down 1 percent based on preliminary data. The better news for hog producers is that demand for live hogs for May-July 2006 was up 1.6 percent from a year earlier and up 0.5 percent from May-June of 2004.

For January-July 2006 live hog demand loss amounted to less than 8 percent of the demand growth of 2004 and 2005 for the first seven months of the year. As indicated above, the demand for live hogs was up slightly for May-July 2006 from 2004 for the same months.

Why the difference in consumer demand and live hog demand? A portion of the difference can be explained by larger pork exports; also, population growth in the U.S. has contributed to the live hog demand growth. Some of the difference can also be explained by the growth in packer slaughter capacity due to Triumph Pork coming on stream.

Unless this extremely strong live hog demand evaporates or slaughter is much larger than now expected, we are going to set a new record for number of consecutive months with the average-cost producer making a profit. We are at 31 months including August 2006 and still counting. The record is 33 consecutive months in the 1970s based on the Iowa State University data.

The average weight of barrows and gilts in Iowa-Minnesota for the week ending August 26 was 0.3 pound below a week earlier and the same weight as a year earlier at 260.6 pounds.

We expect live hog weights for barrows and gilts to be above both a week earlier and a year earlier this week.

Slaughter of hogs pushed higher this week with a Federally Inspected estimate of 2,045,000 head, up 2.1 percent from a week earlier and up 1.7 percent from a year earlier.

With the large slaughter, packers were able to push prices substantially lower for the week.

Live top prices on Friday morning were down $4 to $4.50 per cwt. from seven days earlier.

Weighted average base carcass price for negotiated priced hogs were $4.54 to $6.50 per cwt. below a week earlier Friday morning.

The Friday morning top live prices for select markets were: Peoria $46 per cwt., St. Paul $46 per cwt., and interior Missouri $47.50 per cwt. The weighted average carcass negotiated base prices by area Friday morning were: western Corn Belt $66.99 per cwt., eastern Corn Belt $67.52 per cwt., Iowa-Minnesota $67.26 per cwt., and nation $67.27 per cwt.

Heavier weight feeder pigs at United Tel-o-auction were steady with two weeks earlier for the lighter weight pigs but substantially lower for 50- and 60-pound pigs.

The United prices by weight groups were: 40-50 pounds $91 per cwt., 50-60 pounds $83 per cwt. and 60-70 pounds $74.50 per cwt.

This farm news was published in the Sept. 6, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.

9/6/2006