While hog slaughter may be a bit less than was projected by the USDA June hog inventory report, the number of hogs coming through is significantly higher than it was back in July and，the slaughter of average weekly was 2.302million, increased 8.28 percent than July and 2.45 percent higher than one year ago，and it is expected to be even larger still in September and October. Based on recent trends (last four weeks), we could see slaughter up at least 2.5% from a year ago, which would put average weekly kill at around 2.490 million.

For the week ending August 18, USDA reported the national average price of sliced bacon at $5.36 per pound, 2% less than the week before but now 22% higher than it was in early June. These are some of the highest bacon retail prices since the summer of 2014.In the report on August 21 we noted the dramatic increase in retail bacon prices and the decline in pork retail features. Since then packers have had to significantly lower belly prices in order to keep the product flow moving. How much has the decline in bellies impacted this market? Consider that at the end of July the pork belly primal was valued at $212/cwt, more than double what it was the previous year. Last night USDA quoted the belly primal value at $128/cwt, a whopping$84/cwt (-40%) decline in a matter of 4 weeks. Most of the decline happened in the last 10 days. The decline in the value of bellies has accounted for almost all the decline in the pork cutout. Cash hog prices have come under significant pressure in the last couple of weeks due to a combination of seasonally higher hog numbers and a changing retail picture for pork bellies.

USDA last week issued a report on the combined inventory of hogs and pigs in US and Canada. Over the years the pork industry in both countries has become tightly integrated, with many Canadian hog farms focusing on breeding pigs and then sending feeders to US finishing operations. According to the latest report from Statistics Canada, Canadian producers are doing the same thing as their US counterparts—they are growing. The rate of growth may be slower than in the US but they are expanding nonetheless, and this means more feeder pigs available from Canada in the next 12-18 months. The total breeding herd in Canada as of July 1 was 1.275 million head, 1.2% higher than the previous year. The US breeding herd inventory on June 1 was 6.069 million head, 1.5% larger than last year. The combined US/Canada breeding hog inventory is 7.819 million head, 1.4% larger than the previous year. As production and slaughter is estimated to increase, we’ll see a increased pork supply, and the hog price will be on a downward trend.