Grimes and Plain Weekly Hog Outlook

CHICAGO - Oct 10/08 - SNS -- Following is a week ending hog market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

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Gilt and sow slaughter data continued to show the potential for at

least a slow reduction in the breeding herd. We need to reduce the

breeding head at least five percent from last years level and it may

be we need to reduce as much as 10 percent to get pork supplies in

line with demand.

If we can keep demand growth for live hogs growing, the five percent

reduction will likely get prices back to the profit level for the

average cost produce.

Most of the increase in live hog demand this year is due to export

growth. Will it be possible to get much if any growth in 2009

following the big growth in 2008? Growth in 2009 will likely be at a

relative slow rate following the big gain of 2008 and 2009 exports may

be down from 2008.

Exports for January-July we believe have added $15.79 per cwt of hogs

slaughtered in the first seven months of this year. The total amount

per hog slaughter has been $40.26 per head. This assumes no reduced

value compared from years prior to 2008. The total dollar return to

the pork industry has been about 2.7 billion dollars in 2008. How much

of this growth in income to hog producers can be attributed to the

five million plus dollars spent by the pork board for foreign markets

development is not easy to calculate but the return per dollar has

been big.

Corn price in the futures market dropped to about $4.10 per bushel

this week. That compared with near $8 per bushel in June this year.

This looks like a buy opportunity for hog producers who do not produce

their own feed grain.

The average weight of barrows and gilts live in Iowa-Minnesota last

week at 265.9 pounds per head was up 1.3 pounds from a week earlier

but down 2.2 pounds from a year earlier.

Pork cutout per cwt of carcass retreated more this week with the

cutout on Thursday afternoon at $68.83 was down $4.31 per cwt for the

week. Loins at $92.58 per cwt were up $1.14 per cwt, Boston butts at

$69.58 per cwt were down $1.55 per cwt, hams at $57.25 per cwt were

down $11.13 per cwt and bellies at $75.98 per cwt were down $6.49 per

cwt from seven days earlier.

Live hog prices this Friday morning were $1.00 to $2.00 per cwt lower

compared to a week earlier. The weighted average negotiated carcass

prices Friday morning were $3.80 to $5.11 per cwt lower compared to a

week earlier.

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

$43.50 per cwt, Zumbrota, Minnesota, $47.20 per cwt and interior

Missouri $46.75 per cwt. The weighted average negotiated price Friday

morning by area were: western Cornbelt $63.59 per cwt, eastern

Cornbelt $61.28 per cwt, Iowa-Minnesota $63.74 per cwt and nation at

$62.20 per cwt.

Slaughter this week under Federal Inspection was estimated at 2375

thousand head up 1.5 percent from a year earlier.

Feeder pig price at United Tel-O-Market was substantially lower this

week then two weeks ago. The prices at United were: 40-50 pounds $47

per cwt, 50-60 pounds $50.50- 62 per cwt and 60-70 pounds $43 per cwt.

How much the current financial problems in the US economy are

influencing the hog market is not easily measured but is probably due

to some of the price decline in recent days.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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