The chart of the week is sow slaughter. First we remember that sows are the breeding inventory for swine and that a build up or reduction in the sow herd can give an early indication of pending pork production levels. As one can tell from the chart, sow slaughter during the first 6 months of this year was anything but alarming from the buy side. As a matter of fact, one might be able to derive from the chart that the breeding herd could actually have increased during the first 6 months. June sow slaughter was the largest in 8 months, but sow slaughter since then has basically trended near 5 year average levels. This is certainly alarming news for the sell side of the equation. Hog producers have continued to struggle with poor margins. And although the breeding herd is smaller than a year ago, growth in pig per litter yields have caused the overall hog supply to remain abundant. So much so that live hog prices this week are trending 32% lower than the same week a year ago. There have been recent announcements of some sow herd reductions, but more will almost certainly have to be done. Pork demand remains poor, pork prices are deflated, and the futures markets are not presenting a profitable hedge opportunity for hog producers until the spring at the earliest.
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