Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 8/ 4/09

Sow slaughter continues to run low and it could take a lot of hog producers going bankrupt to return the sector to profitability, according to University of Missouri economists Ron Plain and Glenn Grimes.

"Even though profitability in the hog industry is quite negative, hog producers find it difficult to cut back in number with the large investment in the herd per sow," the economists wrote in their latest Hog Outlook report. "It now looks like it will require bankruptcy by a substantial number of producers to get the sow herd reduced enough to get back in a profitable situation for the average cost producer."

For the four-week period ending July 18, sow slaughter was down 9.2 percent from a year earlier. Gilt slaughter for the four-week period ending July 25 was below a year earlier.

"We still see no signs that the breeding herd is being reduced very much," the economists concluded.

Demand

Meanwhile, U.S. consumer demand for pork January through June was up 4.2 percent from the same months in 2008, but demand for live hogs in the same period was down 4.2 percent.

Live hog demand was weaker than domestic consumer demand for pork due to reduced exports and wider marketing margins at the processor-retailer level, according to the economists.

Last week and early this week pork processors were said to be slowing production with several plant closures due to a combination of excess pork and floating holidays, Reuters reported.
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