Grimes and Plain Weekly Hog Outlook

CHICAGO - Jun 6/08 - SNS -- Following is a week ending hog market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

This week, hog prices continued the steady decline which began in mid

May. Hog carcass prices ended the week in the low $70s, $10 lower

than the May peak, but still $18 higher than in early April. The top

price Friday at Peoria was $46/cwt, $2 lower than the previous Friday.

Sioux Falls had a $51.50 top on Friday and Zumbrota, MN topped at

$49/cwt. The interior Missouri top Friday was $51.25, down $1.50 for

the week. The national weighted average carcass price Friday morning

for negotiated hogs was $70.86/cwt, $1.29 lower than the previous

Friday. Regional average prices on Friday morning were: eastern corn

belt $70.48, western corn belt $71.39, and Iowa-Minnesota $71.31/cwt.

Carcass prices are roughly $2/cwt higher than at this time last year.

The pork carcass cutout value was also lower this week. Hams were

higher, but pork loins, bellies, and Boston Butts were lower. The

Thursday afternoon USDA calculated cutout value was $77.75/cwt, down

$2/cwt from the previous Thursday and $4.50 lower than on May 14.

This week's hog slaughter was 2.117 million head, up 10.9% compared to

the same week in 2007, the first double digit increase in hog

slaughter since late April. January-April slaughter was up 12.6%

(with 1 extra slaughter day). Hog slaughter during the 5 weeks

beginning on April 28 was up only 6.7%. Weekly inspections data

indicate the number of Canadian slaughter hogs imported during April

and May were down 23% compared to a year ago. However, feeder pig

imports continue to run above year-ago levels.

This week’s decline in hog prices may not be as worrisome for hog

producers as the raise in corn prices. Corn futures pushed above

$7/bushel for the first time on Friday. The July 2009 corn contract

ended the week at $7.01/bushel. We expect USDA's June inventory

report to show a smaller sow herd than a year ago. Sow slaughter thus

far in 2008 is up over 7%.

The average carcass weight of barrows and gilts slaughtered the week

ending May 24 was 196 pounds, down 1 pound from the week before and 2

pounds lighter than for the same week in 2007. The national weekly

average carcass weight of barrows and gilts has been below year-ago

levels for 5 consecutive weeks. Producers have made the wise choice

to keep marketings very current. That not only supports hog prices by

reducing the quantity of pork on the market, but also reduces the size

of the feed bill.

The June lean hog futures contract ended the week at $75.12/cwt, down

$2.63 from last Friday. The July contract settled at $74.00 today,

down $4.10 for the week. August closed the week at $76.72/cwt and

October settled at $75.30. The futures market continues to be

optimistic about late 2008 and 2009. The December contract settled at

76.32 and the June 2009 contract closed at $92.45, $17.35/cwt above

where the June 2008 contract close.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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