Grimes and Plain Weekly Hog Outlook

CHICAGO - Jul 11/08 - SNS -- Following is a week ending hog market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

Hog slaughter in the fourth quarter this year is expected to be the

highest of record. What are the chances that we will have more hogs

than slaughter capacity, which would result in very low hog prices?

Federally Inspected hog slaughter during the 13 weeks in

October-December 2007 totaled 29.2187 million head. For the 11

non-holiday weeks in October-December of 2007 (excluding Thanksgiving

and Christmas weeks) Federally Inspected hog slaughter averaged 2.3577

million head per week. This is equal to 95.46 percent of the biggest

slaughter week of record. How much higher will hog slaughter be during

the fourth quarter of 2008 than during October-December?

If fourth quarter slaughter is up 3.7 percent û the increase in number

of market pigs in the June inventory weighing less than 60 pounds. How

many Canadian slaughter hogs will be imported?

In recent weeks, imports of Canadian slaughter hogs have been

averaging 23,000 head below a year-ago levels. It seems reasonable to

expect them to stay well below year-ago levels for the rest of 2008.

Our estimate is for fourth quarter slaughter to be up 2.64 percent

from last year. With this level of slaughter, packers will need to

operate at 98 percent of the record high week for the 11 non-holiday

weeks.

We expect hog slaughter capacity to be a little higher this fall and

winter than last year. Packers are constantly fine-tuning and pushing

up their capacity. However, there is always the risk that something

will happen (fire, strike, etc) to shut down a plant this fall. That

would not be good.

In summary, the current numbers are showing not to expect hog prices

this fall or winter to be near the 1998 low. However, only very modest

changes in these numbers will leave packers unable to slaughter hogs

on a timely basis this fall. When this happened in the fall of 1998,

hog prices dropped to $10 per cwt at the low. Do we expect $10 per cwt

hogs this year? No, could it happen again? Definitely.

Hog weights continue to decline seasonally. Barrow and gilts in

Iowa-Minnesota weights for the week ending July 5 at 259.6 pounds were

the lowest since August of 2005 and down 2.1 pounds from a week

earlier and down 3.7 pounds from a year earlier. Carcass weights of

barrows and gilts under Federal Inspection are down about 1 percent in

recent weeks from a year earlier.

Pork cutout at $80.86 per cwt Thursday afternoon was up $2.12 per cwt

from a week earlier. Loins at $97.76 per cwt were up $1.65 per cwt,

Boston butts at $89.90 per cwt were down $0.33 per cwt, hams at $77.73

per cwt were up $7.13 and bellies at $83.35 per cwt were unchanged

from last week.

Cash live hog prices Friday morning were $0.75 higher to $2.00 per cwt

lower compared to Thursday of last week. Weighted average negotiated

carcass prices were $0.47 - $7.84 per cwt higher Friday morning

compared to eight days earlier.

The live top prices Friday morning at select markets were: Peoria

$42.00 per cwt, Zumbrota, Minnesota, $49.50 per cwt and interior

Missouri $50.50 per cwt. Weighted average negotiated carcass prices by

area were: Western Cornbelt $76.25 per cwt, Eastern Cornbelt $68.61,

Iowa-Minnesota $76.36 per cwt and nation $73.19 per cwt.

Slaughter this week under Federal Inspection was estimated at 2152

thousand head, up 10.3 percent from a year earlier.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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