The last four weeks hog slaughter has been about 3 percent above a year earlier based on preliminary data. On top of the 3 percent increase in number, slaughtered weights have averaged about 1.5 percent heavier than 12 months earlier.

We have been extremely concerned about the demand for live hogs so far this year. However, when one considers we have produced around 4.5 percent more pork in the past four weeks, with the extremely inelastic demand we have had for the past 10 years, we can explain most of the weakness in hog prices to supply.

We still believe we have lost some demand because of the reduction in high protein diets and the increase in competition from chickens. The wholesale price for boneless chicken breasts in January this year averaged $0.98 per pound compared to $1.40 per pound in January 2005. The bottom line is that pork production is up between 4 and 5 percent and if we can finally see some seasonal reduction in supply, prices are likely to strengthen.

We have confirmed that circle virus is impacting at least some of the producers in North Carolina. Apparently, so far, this disease is only in the finishing herds but the death loss can be quite high. Are death losses significant enough to impact slaughter in coming months enough to be meaningful? We do not have enough information to answer this question.

Cash hog prices rallied some in early weeks but ran into troubles in late week as the pork cutout value declined.

Live top prices Friday morning were $1 higher to $2 lower compared to a week earlier. These top prices for select markets were: Peoria $33.50 per cwt., St. Paul $38 per cwt., Sioux Falls $38 per cwt., and interior Missouri $36.50 per cwt. Weighted average base carcass prices were: western Corn Belt $51.61 per cwt., eastern Corn Belt $51.93 per cwt., Iowa-Minnesota $51.77 pre cwt., and Nation $51.60 per cwt.

Cash feeder pig prices this week at United Producers Tel-O-Auction were $10-20 per cwt. higher than two weeks earlier. The range in prices by weight groups was: 40-50 pounds, $131 per cwt.; 50-60 pounds, $121-132.50 per cwt.; 60-70 pounds, $95-117.50 per cwt.

The summer futures lean hog contracts were pushed some lower this week. Possibly hedging pressure by producers. Slaughter this week under Federal Inspection was estimated at 2,030,000 head, up 2.5 percent from 12 months earlier.

This farm news was published in the February 8, 2006 issue of Farm World.