CHICAGO Aug 9 The number of sows slaughtered
last week rose to the highest level in eight months, U.S.
government data showed on Thursday, underscoring farmers' rush
to liquidate their herds due to rising feed costs caused by the
worst drought in 56 years.
The rush to slaughter could bode well for consumers in the
short-run as a pick-up in supplies pressures pork prices at the
grocery store and restaurant levels, but prices could rise by
mid-2012 as hog supplies tighten, analysts said.
Prices for sows, which are typically retained by farmers for
breeding, have been tumbling as the slaughter rate rises.
U.S. Department of Agriculture data showed the price of sows
falling 33 percent last week to $42.66 per cwt from the year's
high of $63.67 in early March and off 36 percent from a year
ago's price of $67.
The drought has devastated the corn and soybean crops, vital
feed ingredients for the livestock and poultry industries,
causing corn prices at the Chicago Board of Trade to rally
nearly 60 percent to a record high $8.29-3/4 on Thursday.
"Slaughter at the highest of the year, paired with the drop
in sow prices suggest sow slaughterers are having trouble
finding shackle space for all the sows being offered," said
independent market analyst Bob Brown in Edmond, Oklahoma.
USDA's weekly slaughter data for the week ended July 28
showed sow slaughter at about 61,400 head, up 5.4 from a year
ago and the highest since the week of Dec 10, 2011, when 67,700
"Recent increases in weekly sow slaughter are in response to
increasing break-evens and further significant declines in
producer profitability brought about by increasing corn and
soybean meal prices," said Erica Rosa-Sanko, analyst with the
Livestock Marketing Information Center in Denver.
Rosa-Sanko said reducing the sow herd was one way hog
producers were responding to large losses that are forecast for
the remainder of this year into 2013.
Further reductions in the sow herd will be reflected in a
smaller hog slaughter numbers next summer and fall, she said.
Pork packing companies were losing $1.20 per head of hog
they were processing on Thursday, compared with a profit of
$6.11 a week ago and a profit of $1.05 a day ago, according to
Colorado-based analytics firm HedgersEdge.com.
The United Nation's Food and Agricultural Organization said
on Thursday there was potential for the current increase in food
prices to develop into a crisis like the one in 2008 when high
prices for staples like rice sparked riots in some
(Editing by Steve Orlofsky)