Fewer hogs, along with a recent rally in cattle prices, are likely to continue upward price pressure for both livestock and meat prices, reports the Des Moines Register.

 

The likelihood of the first profitable year for livestock producers since 2007 will help farm incomes rise by an average of 10% this year, the USDA said.

 

Consumers so far have seen only single-digit increases in meat prices despite price increases for live cattle and hogs and finished cuts of meat. Analysts said demand for beef, which lagged in 2009 under the weight of the poor economy, is picking up.

 

Iowa's hog and cattle industries generate US$8 billion or more in cash receipts annually. The USDA reported the national hog inventory on June 1 was down from last year by 4% to 64.4 million head. The herd declines have fed a rally in hog prices from a low of US$50 on the futures board last September to US$87 this spring.

 

After stalling briefly last month, the rallies in hogs and cattle appear to have resumed on continued strong demand in both domestic and export markets as retailers have let their prices stay behind increases in wholesale costs.

 

Cash prices for live cattle - those just weaned from their mothers to be put on pasture - are bringing up to US$91 per hundredweight in the cash markets, according to reports.

 

"The slaughterhouses are making profits up to US$94 per hundredweight, so right now the packers have incentive to buy and producers have incentive to sell," analysts said.

 

Demand appears to have rebounded for both hamburger and choice beef, which slumped last year in the face of the slack economy.

 

Retailers, no doubt aware of the fragility of demand for beef, have increased beef prices by 7% from last summer while wholesale prices are up 22%, according to USDA figures.

 

The same is true on the pork side, where retail prices are up 9% from last summer while wholesale cutout prices have risen by as much as 28%.

 

Russia has recently relaxed its bans on US poultry. The expected increase in exports to a major customer like Russia will take some cheaper poultry, a protein competitor to pork, off the domestic market, experts said.