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Hog producers appear to be reducing their breeding herds
Hog Outlook
By Glenn Grimes & Ron Plain
University of Missouri - Columbia

Sow slaughter continues to run substantially above year earlier levels. This larger slaughter started in early March. For the period of week ending March 11 through the week ending August 5, we slaughtered 127,000 more sows from domestic U.S. production in 2006 than in 2005.

For just June and July of this year, we have slaughtered nearly 42,000 more sows than a year earlier from domestic production. The imports of cull sows and boars from Canada have been removed from the data.

Gilt slaughter for both of these periods has been slightly larger in 2006 than in 2005.

Is it possible that we are reducing the size of the breeding herd with the average producer with 30 consecutive months of profit and still counting? I believe the odds are near zero.

At this time we can only conclude that the breeding herd is being reduced or some of our data is incorrect. There does not appear to be any other logical explanation. If these larger slaughter numbers for sows and gilts continue through August, it will add additional anticipation for what the September 1 Hogs and Pigs Report will show about the size of the breeding herd.

We hear from the trade that there is some growth occurring by the mid- to large- size producers. However, we have very limited information about what small hog producers are doing as to their herd size. Is it possible that all of the discussion about higher corn prices for the next several years is contributing to some producers reducing their hog herd or exiting the industry completely?

Live weights of barrows and gilts in Iowa-Minnesota stabilized last week with weights at 259.9 pounds per head, up 0.1 pound from a week earlier. Weights for last week were still 1.1 pounds above 12 months earlier. In the last two years, average weights have started the seasonal increase during the third week ending in August. With the cooler weather over much of the Corn Belt this week, there is a good chance for weights to grow this week from a week earlier.

For January to June, net pork exports were 10.05 percent of production. This is up a short 2 percent of production from the same period in 2005. Cash hog prices would probably have been about 10 percent lower than they have been without this export growth. For this six month period, live hog prices 51-52 percent lean U.S. basis have averaged $45.54 per cwt. Without the increase in pork exports, the 51-52 percent lean hogs would probably have averaged about $41.00 per cwt.

There is good news from north of the U.S. border. Canada’s hog breeding herd on July 1 was down slightly from last year at 99.6 percent of the 2005 level. The total Canadian herd on July 1 was down 3.1 percent from a year earlier.

The retail price of pork for July was up from June by 1.4 percent and the highest it has been since June of 2005. The July 2006 price was $2.842 per pound compared to $2.840 last July.

Hog prices held well this week with slaughter up in the mid-1,900,000 head. Top live prices Friday were down $1 to up $1 per cwt. compared to last Friday morning.

The top live prices Friday morning for select markets were: Peoria $47 per cwt., St. Paul $51 per cwt., Sioux Falls was unavailable and interior Missouri $47.50 per cwt. The weighted average carcass price for negotiated hogs Friday morning by area were: western Corn Belt $71.15 per cwt., eastern Corn Belt $68.24 per cwt., Iowa-Minnesota $71.89 per cwt. and nation $69.33 per cwt.

Slaughter this week under Federal Inspection was estimated at 1,965,000 head, down 0.5 percent from a year earlier.

This farm news was published in the August 23, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.

8/23/2006