November 15, 2005

US weekly hog slaughter hit seasonal high

While US hog slaughters have been very large in recent weeks, they have also been trending slightly downward, leading to ideas among some market observers that the seasonal top for slaughter may have already been set, but traditionally there are at least two more big kill periods left in the year that could challenge the figure for the week ending Oct 22, which is the largest so far for this year.

The two weeks left in the year with traditional high slaughter figures are the one immediately following Thanksgiving week, and the one just prior to the Christmas holiday week.

Coming off a 10 1/2-month high for the slaughter reached the week ending Oct 22 at 2.191 million head, the figures for the next two weeks were 2.152 million and 2.143 million respectively, followed by 2.084 million last week when four plants were down Friday for observance of the Veterans Day holiday.

Ron Plain, agricultural economist at the University of Missouri, said processors "have been killing lots of hogs" this fall, and some weeks were considerably above their respective year-ago figures. He said the government's quarterly hogs and pigs data released in September suggested that weekly hog supplies and slaughters should "back off a bit" during the second half of the fourth quarter.

In its September report, the USDA estimated the two middle weight categories, which were the 120-179 and 60-119 pound groups, as of Sep 1 was up one percent from a year ago. The lightest category, those weighing under 60 pounds, as of that same date was unchanged compared with a year ago.

However, Plain said because of the Thanksgiving Day holiday next week, nearly a full slaughter day's worth of hogs would be spilled forward into the following week. All major packers would take that day off since it is a national holiday. Therefore, there would be potential for slaughter the week after Thanksgiving to exceed the week ending Oct 22 figure.

Edmond, Oklahoma-based Bob Brown, a private analyst, said during the last five years, hog slaughter has tended to spike during the week before Christmas. In fact, the week ending Dec 18 slaughter reached 2.258 million head, the second largest ever behind the same week in 1998.

Brown said improved slaughtering margins in December, along with packers and producers looking ahead to back-to-back weeks with holidays, contributed to the very large slaughter figures for the week before Christmas week.