Based on the March 1 Hogs and Pigs report, hog slaughter in the U.S. will likely stay above 2003 levels at least through the third quarter, according to Glenn Grimes and Ron Plain, University of Missouri agricultural economists.
Hog slaughter for the first quarter of 2004 was up 4.3 percent based on preliminary data. A portion of this growth was due to one more weekday in the January-March quarter this year than in 2003. Without that extra day, slaughter would probably have been up a little less than 3 percent for the quarter compared to 2003.
Grimes and Plain estimate the second quarter slaughter will be up about 3.5 percent from 2003. The heavier market weight inventories were up about 2.2 percent from a year earlier and we expect a 1 percent or more increase in slaughter this quarter from larger slaughter hog imports from Canada. Even with this larger slaughter, hog prices are expected to be 13 percent to 20 percent higher than in 2003, provided the exceptionally strong demand of the first quarter of 2004 continues.
Grimes and Plain are convinced that the low-carb diets are a major factor in this strong demand. If so, the economists stress that most weight-loss diets are fads that come and go. If these diets are a major part of the growth in demand, the growth may not be sustainable.
Grimes and Plain think the life of this extremely large increase in demand may be relatively short. But, the economists have a very strong demand built into hog prices for the next 12 months.