Grimes and Plain Weekly Hog Outlook

CHICAGO - Oct 3/08 - SNS -- Following is a week ending hog market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

height="4" alt="green line">

The September 1, Hogs and Pigs Report came in very close to the

average of the trade estimates. USDA estimate of the total number of

hogs and pigs was 102 percent of a year earlier. The trade estimate

was 102.1 percent. USDA estimate of the breeding herd was 97.4 percent

of 12 months earlier and the trade estimate was 97.3 percent of 2007.

The market herd estimate was the same for both at 102.5 percent.

The futures market on Monday ended the day with the nearby October and

December contracts down $1 per cwt or more and practically all of the

contracts for the next year were down at least a little.

Our estimate for the fourth quarter slaughter at 31 million head

commercial is up about two percent. We have adjusted the slaughter

estimate from the heavier weight market inventories down about 1.5

percent due to expected fewer slaughter hog imports from Canada.

Total commercial hog slaughter in 2008 is expected to exceed 117

million head, up nearly 7.5 percent from the previous record high

slaughter in 2007. Slaughter in the first quarter of 2009 is

forecasted to be down a littler over two percent based on the light

weight market inventories. The second quarter 2009 slaughter, based on

farrowing inventories, show a decline of five percent. We are a little

apprehensive that this much decline will occur. This feeling is

reinforced by the farrowing inventories for the first quarter of 2009

being down only about three percent.

It now looks like slaughter will be down enough in the second and

third quarter of 2009 for prices to be at or above the cost of hog

production for the average cost producer. This is assuming we do not

lose a bunch of demand and we have a near normal corn crop developing

in 2009.

Live weights of barrow and gilts in Iowa and Minnesota for the week

ending September 27, was up 1.6 pounds from a week earlier but still

2.7 pounds below a year earlier. However, for the week ending

September 20, barrow and gilt carcass weights at 195 were only down

one pound from a year earlier.

Pork product cutout was pushed lower again this week with the cutout

at $73.14 per cwt of carcass down $1.11 per cwt from a week earlier on

Thursday afternoon.

Loin prices at $91.44 per cwt were up $1.10 per cwt, Boston butts at

$71.13 per cwt were down $1.92 per cwt, hams at $63.38 per cwt were

down $4.96 per cwt and bellies at $82.47 per cwt were up $0.12 per cwt

from a week earlier.

Live hog prices Friday morning were $0.75 higher to $1.00 per cwt

lower compared to seven days earlier. Weighted average negotiated

carcass prices Friday morning were $0.76 to $0.04 per cwt lower

compared to Friday last week.

The prices for live hogs at select markets Friday morning were: Peoria

$45.56 per cwt, Zumbrota, Minnesota, $48.00 per cwt and interior

Missouri $48.25 per cwt.

The negotiated weighted average carcass prices by areas for Friday

morning were: western Cornbelt $67.69 per cwt, eastern Cornbelt $66.39

per cwt, Iowa-Minnesota $67.54 per cwt and nation $66.90 per cwt.

Slaughter this week under Federal Inspection was estimated at 2323

thousand head up 0.6 percent from a year earlier.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. and/or STAT Publishing or its staff and/or management.