The chart of the week is US weekly sow slaughter. As reported in the latest issue of the Weekly Commodity Report, the percentage of sows slaughtered during April compared to total hog slaughter was the largest in 9 months which indicates that swine breeding herd liquidation likely accelerated during the month. Why did this occur? Well, inflated feed costs have pinched hog farmer margins for some time now with Iowa State estimating losses since the fall. Farmers, in an attempt to control further hog supplies and push hog prices higher, typically reduce the breeding herd which in turn will lead to a decline in available hogs down the road. Increased sow slaughter can actually be bearish for certain pork markets especially trimmings for the near term. However, the long term impact is bullish for pork. There has been talk in recent weeks that sow slaughter has slowed due to the increase in hog futures. And the recent rise in sow prices would support this. However, sow slaughter during May thus far has been roughly 7% bigger than last year and the largest for the time period this decade.
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