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With strong corn prices, hog producers look to break even
Hog Outlook
Glenn Grimes & Ron Plain
University of Missouri - Columbia

Cash hog prices held up very well through November with the record slaughter. The average net price for all non-packers over hogs for Friday and Saturday following Thanksgiving were almost $45 per cwt. live - up more than $2 per hundredweight (cwt.) from the same days in 2005.

Demand for live hogs for January-October in 2006 was up 0.1 percent from a year earlier. However, demand for pork at the consumer level was down 4.1 percent for these 10 months of 2006 compared to 2005. For the months of August-October of 2006 live hog demand was up 2.8 percent from 12 months earlier and consumer demand for pork was only down 0.5 percent compared to the same months of 2005.

Even with the strong live hog demand, the current cost of corn when completely bid into hog production cost will result in breakevens at best for average cost producers. Therefore, the odds are high that the hog herd in North America will need to be reducing to provide average products for producers.

The good news is that for the last four weeks available both gilt and sow slaughter has risen at levels that resulted in reduction of the breeding herd in the past. Letís hope the larger gilt slaughter is not due to short fluctuation due to sample data.

Retail pork prices for January - October showed a low of 0.9 percent from a year earlier. However, retail prices for August - October were up 1.9 percent in 2006 compared to 2005. This is great news with pork products running at record high levels.

Pork exports for January-September were up 11.5 percent for 2006 compared to a year earlier.

Pork imports for the same period were down 1.5 percent compared to 12 months earlier.

Our number one customer continues to import less lean pork from us in 2006 than in 2005. For January-September, Japan purchases were down 7.9 percent, Canada was up 7.6 percent, and Mexico was up 18.6 percent, Russia up 131.2 percent, South Korea up 47.8 percent, China and Hong Kong up 10.7 percent Taiwan up 3.9 percent, Caribbean up 89.3 percent and other up 7.9 percent.

Live hog imports from Canada were up 7 percent for January - September compared to a year earlier. Feeder pigs imports were up 12.2 percent from last year.

However, Slaughter hog imports for these nine months were down 3.3 percent from 12 months earlier.

Weighted average negotiated base carcass prices Friday morning were mixed cwt. from two weeks earlier.

The average negotiated boar carcass prices by areas for Friday morning were western Corn Belt $59.19 per cwt., eastern Corn Belt $58.68 per cwt., Iowa-Minnesota $59.05 per cwt. and nation $58.86 per cwt.

Feeder pig prices last week at United Tel-O Auction were steady to $10 per cwt. higher than a year earlier. The united prices were 50-60 pounds $81.97 per cwt., 60-70 pounds $81-84.50 per cwt. and 70-80 pounds $66.50 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,156,000 head down .6 percent from a year earlier.

Pork product prices per cwt. of carcass for Thursday afternoon was $65.56 per cwt.

Live weights of barrows and gilts in Iowa-Minnesota continue to run below a year earlier.

For last week, these weights were at 2705 pounds per head, down one pound from 12 months earlier.

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