Regional Prices

If you followed regional market prices this past week, you should have noted that the eastern cornbelt price quote was generally higher than the western cornbelt or Iowa/Minnesota quote. The Friday 1:30 report this past week quoted the Eastern cornbelt weighted averagecarcass base price at $92.46, while the Iowa/Minnesota weighted average was $89.39 and the western cornbelt average was $88.88. This is opposite the historic average where the western cornbelt and Iowa/Minnesota quotes are generally $1-3 higher than the eastern cornbelt.

I happened to have a conversation with a packer buyer this week. He said at his plant in the western cornbelt they are having trouble killing all of the pigs being offered to them. He said other plants in his region were also having no difficulty in filling their kills.

However, he said in the eastern region, especially in North Carolina, the reports he was receiving suggested a shortage of pigs for slaughter. This would explain the higher price offering. If pigs are short in North Carolina, the bid price has to increase to offset the additional transport price to bring in pigs from surrounding states. If pigs continue to shift from North Carolina to Midwestern states, will the eastern price continue to be higher than the historic higher Iowa/Minnesota price?

The number of pigs being slaughtered weekly has started dropping from winter highs. If you’ve noted, instead of 425,000 or 427,000 head per day, kills are now around 410-415,000 head, with some Friday’s now under 400,000 and Saturday kills at 40-50,000 instead of 100,000+ in October, November and December.

I’ve talked with several producers who have sold their summer production already at prices above $1 on the Chicago Board. Even if the basis is unusually wide, these prices are historic highs. Ultimately, the consumer will have to pay the bill. So far, packers and processors are reporting good movement of product from their plants and the frozen stocks report isn’t alarming. The million dollar question – will the economy continue improving enough that consumers remain willing to pay?

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