USDA's June Hogs & Pigs Report showed that hog slaughter will continue to run high through the rest of the year, notes Bob Brown, an independent market analyst in Edmond, Okla. "Just slightly below year ago levels," he notes.

Most market-weight categories in the report reflect only about a 2 percent decline from 2008 numbers. See "U.S. Hog Inventory Down 2 Percent."

The heaviest weight category (180 pounds and up) was unchanged from last year, with the lightest weight group (under 60 pounds) dropping 2.4 percent from year-ago levels. 

All in all, the pre-report estimates were close to the numbers that USDA reported, so the markets should show little surprise.

However, the cuts may disappoint the market. "Given what happened in 2008, I would have thought we'd have a 5 percent decline in production by now," says Brown. Most of the decline in U.S. slaughter has come from fewer Canadian feeder pigs and market hogs being shipped to the United States.

Slaughter for the first five months has been 1.2 percent below 2008 levels, that's about 1.15 million head. Brown points out that 800,000 fewer Canadian feeder pigs have reached the Unites States. In contrast, the U.S. cuts have been milder. For example, the March/May pig crop has only been down 83,000 head; and December/February down 157,000 from previous year's levels.

Looking ahead to prices, Brown and agricultural economists Ron Plain, University of Missouri, and Victor Aideayn, HIS Grain Commodities, offer the following projections. All are based on carcass prices per hundredweight.

Brown: 3rd quarter 2009 = $60; 4th quarter = $65

Plain: 3rd quarter 2009 = $59; 4th quarter = $57; 1st quarter 2010 = $64; 2nd quarter = $68; 3rd quarter = $69; 4th quarter = $65. He points out that there will "not be profit in any these unless we can get feed prices down."

Aideyan: 3rd quarter 2009 = $55; 4th quarter = $51; 1st quarter 2010 = $60