LIVE HOGS FUTURES

Strong pork demand and restrained production are helping hog prices this year. The December 1st count of all U.S. hogs and pigs was 61.2 million head, up .4% from a year ago. The December 1st breeding herd was also up slightly from a year ago and the September to November pig crop was up .8% from a year ago. On December 9th, the USDA said that pork production will increase 1% in 2005 and 2% in 2006. The price estimate for barrows and gilts was increased from 49.63 to 50.01 cents (roughly 67.6 cents lean) for 2005 and remained at 45.5 cents for 2006 (61.5 cents lean). Frozen pork inventory as of November 30th was 434 million pounds, down 1% from a year ago. Frozen bellies totalled 28.7 million pounds, down 16% from a year ago. In 2005, U.S. pork production was up .8% from a year ago.

Hog slaughter and pork production typically achieve annual highs in the fourth quarter of each year, while hog prices register annual lows. The current market situation reflects typical seasonal patterns...

Prices are lower not only because of slightly larger year-over-year hog numbers, and heavier dressed weights, but also because U.S. consumer demand for pork appears to have declined compared with last year. Foreign demand for U.S. pork products and lower numbers of swine imported from Canada, however, are supporting factors in the market right now.

USDA's Livestock, Dairy, & Poultry Outlook. December 16, 2005.

Cash hog prices this week gained a little more strength. We believe there is a reasonably good possibility that we have had the low in hog prices for 2005. Remember, however, the largest slaughter week for the year may be the first week following Thanksgiving.

Glenn Grimes & Ron Plain, University of Missouri - Columbia. November 11, 2005.

Ron Plain, University of Missouri livestock analyst, told Agriculture Online he sees a slowing pork demand lowering live hog prices to the mid $30 per cwt range by the end of 2006...

"We're heading into a period where we think producers have had profitability for 20 consecutive months," Plain said. "History says this gives producers enough money in their pockets so they save more gilts and expand production.

Agriculture.com. October 20, 2005.