According to the USDA's Livestock, Dairy and Poultry report, the agency lowered second-quarter commercial production slightly, based on lower than expected weekly kill numbers. Small reductions in weekly slaughter could be a packer response to recent weak margins but could also reflect tighter hog supplies. However, higher estimated dressed weights largely offset lower slaughter numbers.

The upcoming Hogs and Pigs Report, to be released June 29th, will provide further information on hog supplies. Second-quarter 2012 commercial pork production is expected to be 5.5 billion pounds, 3.3 percent ahead of the same period last year. For 2012, the U.S. pork sector is expected to slaughter almost 2 percent more hogs, at higher dressed weights than last year. Both of these factors contribute to a 2012 commercial pork production forecast of 23.4 billion pounds, almost 2.7 percent above production in 2011.

Second-quarter average prices for live equivalent 51-52 percent lean hogs are expected to be $59-$60, almost 14 percent below the same time last year. For 2012, the expected average hog price is $59-$61 per cwt, almost 9 percent below 2011.