May 13, 2004

 

 

US Hog Futures Prices Surge On Growing Demand

 

Hog futures in Chicago on Tuesday surged the maximum allowed by the Chicago Mercantile Exchange, reaching a four-year high, on signs of rising demand.

 

Wholesale pork prices rose to a seven-year high Monday and are up 47 percent since a case of mad cow disease in Washington state in December led to a collapse in U.S. beef exports.

 

"Demand is just amazing, and we don't think it has peaked," said Ron Plain, an agricultural economist at the University of Missouri.

 

Hogs for June delivery rose the exchange's daily trading limit of 2 cents, or 2.7 percent, to 76.5 cents a pound, the highest closing price since March 2000. Hog futures have risen 17 percent in the past year on rising domestic demand and export sales.

 

More than 40 nations banned U.S. beef after the mad cow report. U.S. meat demand also has been helped by the popularity of high-protein diets.

 

The value of a 185-pound hog carcass rose 80.77 cents a pound Monday, the U.S. Department of Agriculture said.

 

A decline in the U.S. slaughter rate and the average weight of hogs signal that supplies are tight and that processors are buying more animals to keep pace with demand, Plain said.

 

Minnesota is the nation's third-largest pork producer. Hog production generated $1.4 billion for the state's farmers in 2001. The state has about 6 million hogs and markets about 5.5 million each year, according to the Minnesota Department of Agriculture.

 

Processors slaughtered 3.8 percent fewer hogs last week compared with the week before, the USDA said. The average weight of the animals slaughtered in the Iowa and southern Minnesota were 0.3 pounds lower, a sign that younger animals are being processed.

 

Cash hog prices in Iowa and southern Minnesota have jumped 70 percent since Dec. 23 to an average of 78.14 cents Monday, the department said.

 

"Cash hog prices should be higher in June than they are in May with the declining hog slaughters," Plain said.