Grocery store pork prices during Sept. were record high for the fifth consecutive month. The average price of pork at retail last month was $3.30 per pound, up 6.8 cents from Aug. and 39.4 cents higher than in Sept. 2009. The average hog price was a bit lower in Sept. than Aug. pushing the pork marketing margin to its highest level since Aug. 2009.

The record retail pork prices appear to have more to do with a tight per capita pork supply than with stronger demand. The domestic pork demand index is still below the year-ago level. However, the live hog demand index is higher this summer thanks to a large increase in export demand for pork.

The record retail pork prices this summer may be slowing sales volume which could be one of the reasons that hog prices have been dropping so fast this month. USDA’s Thursday afternoon calculated pork cutout value was $76.76 per cwt., down $4.49 from the previous Thursday. Loins, butts, hams and bellies were all lower.

Like the cutout value, hog prices were lower this week. The national weighted average carcass price for negotiated hogs Friday morning was $62.47 per cwt., down from $64.35 per cwt. the previous Friday. Regional average prices on Friday morning were: eastern Corn Belt $61.07, western Corn Belt $64.58, and Iowa-Minnesota $64.75 per cwt. The top live hog price Friday at Sioux Falls was $45 per cwt. The top at Peoria was $41.50 per cwt. The interior Missouri live top Friday was $45.25 per cwt., down from $47.50 last Friday.

The year started with hog prices below breakeven and it looks like it may end that way. Given current feed costs, a hog carcass base price of roughly $67 per cwt. is needed to cover all costs for the typical producer. There is reason to hope for hog prices to rebound before the end of 2010, but they may not outpace the run up in feed cost.

The primary reasons for this month’s hog price drop are the rapid increase in daily hog slaughter and slaughter weights. September hog slaughter was 6 percent below year-ago.

It looks like Oct. slaughter will be within 2 percent of last year. Hog slaughter totaled 2.331 million head this week, up 3 percent from the week before and up 0.3 percent compared to slaughter during the same week last year.

The average carcass weight of barrows and gilts slaughtered the week ending Oct. 9 was 202 pounds, up 1 pound from the week before and 2 pounds heavier than a year ago. Iowa-Minnesota live weights last week averaged 274 pounds, up 4.9 pounds compared to a year earlier and a new record high for this data series. The old record of 273.8 pounds was for the week ending Jan. 7, 2006.
The December lean hog futures contract ended the week at $70.65 per cwt. The February contract ended the week at $75.92 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.