Hog Outlook
Ron Plain
University of Missouri - Columbia

Pork production is down, exports are up and pork supplies are tight. There were only 391 million pounds of pork in U.S. cold storage on July 31. That was 27.5 percent fewer than a year earlier, and the lowest of any month since October 2001.

Statistics Canada reports the Canadian sow herd was down 4.8 percent on July 1. This is the 21st consecutive quarter below year-ago.

Canadian sow numbers are down 19.1 percent compared to five years ago. Litters farrowed during the second quarter were down 4.3 percent. Stats Canada is predicting that third-quarter farrowings will be down 5.7 percent and fourth-quarter, down 5.5 percent.

The U.S. Commerce Department has revised downward its estimate of economic growth. It now says the U.S. economy grew at an annual rate of only 1.6 percent during the second quarter of 2010 rather than its earlier 2.4 percent estimate.

That is the second straight quarter of slowing growth, and implies growth could turn negative later this year. Slow economic growth is not good for meat demand.

The number of hogs sold on the spot market continues to decline. During the first half of 2010 only 7 percent of barrow and gilt sales to large packers were negotiated sales. It is up to producers to decide if they want the spot market to survive. If producers want spot market pricing in the future, they have to commit to selling a portion of their hogs that way.

The pork cutout value set a new record this week, peaking at $96.74 per cwt. on Tuesday, up $2.33 from the old record set in August 2008. Since Aug. 24, the cutout has been dropping. Thursday afternoon’s calculated pork cutout value was $93.73 per cwt., down 63 cents from the previous Thursday. Loin and butt prices were lower last week, while hams and bellies were higher.

The national weighted average carcass price for negotiated hogs Friday morning was $79.36 per cwt., $1.28 lower than the previous Friday. Regional average prices on Friday morning were: eastern Corn Belt $79.30, western Corn Belt $79.49 and Iowa-Minnesota $79.26 per cwt.

The top live hog price Friday was $56 per cwt. at Sioux Falls and $55 at Peoria. The interior Missouri live top Friday was $56.50 per cwt., 75 cents higher than the previous Friday.

Last week’s hog slaughter totaled 2.11 million head, up 1.8 percent from the week before, but down 4.2 percent compared to slaughter during the same week last year. Since June 1, barrow and gilt slaughter has been about 2 percent lower than implied by USDA’s June Hogs and Pigs report.

The average carcass weight of barrows and gilts slaughtered the week ending Aug. 14 was 197 pounds, the same as the week before and the same as a year earlier. Iowa-Minnesota live weight last week averaged 266.6 pounds, up 1 pound compared to a week earlier, but 0.6 pound lighter than the same week last year.

The October lean hog futures contract ended the week at $74.82 per cwt., down $2.38 from the previous Friday. The December contract settled at $72.57 for the week. February closed the week at $75.07 per cwt.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Ron Plain may write to him in care of this publication.