Released: February 21, 2002
Kill Date: March 12, 2002

Hog Prices Climb, Further Gains Expected

MANHATTAN, Kan. – Hog prices early this year climbed over last year’s levels, spurred by strong exports and steady domestic demand, according to Kansas State University agricultural economist James Mintert.

Slaughter hog prices in the Iowa-southern Minnesota market climbed to an average $55 per hundredweight [cwt] on a carcass-weight basis early in 2002 through the mid-February – nearly 5 percent over year-ago levels, he said.

Although hog prices slipped in mid-February, largely owing to lower wholesale pork values, hog prices tend to strengthen from mid-winter through spring, Mintert said. And because prices have been higher than expected early in 2002, winter quarter [January-March] prices could average in the upper $50s per cwt [carcass basis], instead of the mid-$50s that were previously expected.

The early-year gains have been especially encouraging because pork values have been steady with 2001 levels.

"The price strength was particularly impressive in light of the fact that weekly hog slaughter averaged 1.845 million head, down just 0.3 percent compared to last year," said Mintert, who is the livestock marketing specialist with K-State Research and Extension. "And pork production was larger than last year because producers continue to market hogs at heavier weights."

Pork production averaged about 1 percent above last year’s levels during the first six weeks of 2002, he said.

Part of the boost to hog prices can be attributed to strong pork exports, which rose 17 percent in October and November, 2001 over year-earlier levels. December data was not yet available. Much of the increase came from an increase in exports to Japan, the U.S.’ largest pork customer, Mintert said.

October-November exports to Japan jumped 43 percent compared to 2000, he added. "Apparently, concerns about BSE [bovine spongiform encephalopathy] among the Japanese stimulated demand for beef substitutes and U.S. pork was a big beneficiary."

That’s even more surprising when one realizes the Japanese still have a "safeguard" tariff in place, he said.

Preliminary data indicate per capita pork consumption in the United States slipped 1.2 percent last year, but longer-term data indicate that pork demand has been relatively stable the last three years, and was "substantially stronger" than in the mid-1990s, the economist said. The early numbers show that U.S. per capita pork consumption last year was 51.8 pounds, slightly down from 52.4 pounds in 2000.

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K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Mary Lou Peter, Communications Specialist
mlpeter@oznet.ksu.edu
K-State Research& Extension News