Grimes and Plain Weekly Hog Outlook

CHICAGO - May 16/08 - SNS -- Following is a week ending hog market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

Pork exports in March were up 37.7 percent from a year earlier. March pork exports were the second largest of record exceeded only by February of this year.

Mainland China and Hong Kong growth amounted to 37 percent of the growth. In other words, 63 percent of the growth was from countries other than China and Hong Kong.

For January-March, pork exports were up 39.7 percent from 12 months earlier. Pork exports to Mexico in March were up for the first month in over a year by 11.2 percent. For January-March, exports to Mexico were up 0.2 percent, up 7.8 percent to Japan, up 27.1 percent to Canada, down 9 percent to South Korea, up 141.1 percent to Russia, up 309.4 percent to mainland China and Hong Kong, down 22.2 percent to Taiwan, down 16.7 percent to Australia and up 82.5 percent to other countries.

Pork imports for January-March were down 9.2 percent from a year earlier.

Net pork exports by the U.S. for January-March at 14.75 percent of production were up from 10.23 percent of production in 2007. Hog prices for January-March would probably have been 12-15 percent lower than experienced without the growth in exports.

In these three months, one out of every 5.5 hogs slaughtered in the U.S. was exported. This compared with one out of every 6.8 hogs slaughtered in the U.S. during January-March of 2007.

The rate of increase in live hog imports from Canada is declining. For January-March, total live hog imports from Canada were up 26.6 percent; but for March, they were only up 10.3 percent. Feeder pig imports from Canada for January-March were up 27.3 percent from 12 months earlier; but in March, they were up only 14 percent from 2007. Non-feeder pig imports for January-March were up 25.1 percent from a year earlier, but March was up only 1.8 percent from 12 months earlier.

We expected the decrease in rate of growth to decline for non-feeder pigs, but we are a little surprised in the rate of decline in feeder pig imports at this time.

Good news as to pork exports is that the growth is fairly broad based. Without growth in China and Hong Kong from last year to this year, we would still be up 17 percent in exports for January-March. Even if you remove the growth in China, Hong Kong and Russia, the U.S. exports of pork for January-March would still be up 7 percent from 12 months earlier.

Pork cutout at $82.25 per cwt was up $4.04 per cwt from a week earlier.

The changes in price for the week for the different cuts were: loins at $112.21 per cwt were up $4.88 per cwt, Boston butts at $91.59 per cwt were up $7.24 per cwt, hams at $61.48 per cwt were up $1.70 per cwt and bellies at $91.93 per cwt were up $0.95 per cwt.

Pork product prices have increased between 40-50 percent in the last seven weeks &##035;151; this has to be one of the quickest run-ups in pork value of record. Demand is just unbelievably strong and still appears to be more than just exports.

The average live weight of barrows and gilts last week in Iowa and Minnesota at 264 pounds was up 0.3 pound from a week earlier but still down 1.9 pounds from the same week last year.

Food prices in April increased the sharpest in 18 years. However, when combined, beef and pork prices on average were down in April 2008 from a year earlier. Pork prices were up 1.6 percent, but beef prices were down 2.7 percent. The big increases in meat prices are still to come and they will occur.

Live hog prices Friday morning were $0.50 per cwt lower to $3 per cwt higher compared to a week earlier. Weighted average negotiated carcass prices Friday morning were $1.30 to $1.45 per cwt higher compared to seven days earlier.

The top live prices for select markets were: Peoria $53 per cwt, Zumbrota $56 per cwt and interior Missouri $57.50 per cwt. The weighted average negotiated carcass prices by area were: western Cornbelt $77.57 per cwt, eastern Cornbelt $78.22 per cwt, Iowa-Minnesota $76.80 per cwt and nation $77.98 per cwt.

Hog slaughter this week under Federal Inspection was estimated at 2,065 thousand head, up 5.5 percent from a year earlier but the smallest full-week slaughter since August 2007.

Sow slaughter for the week ending May 3 dropped back near year-earlier levels. With current hog prices and current futures market prices for the next year, the signals to hog producers are they do not need to reduce the breeding heard.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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