The hog slaughter for the week of April 28 was 2.155 million head, a 9.39% increase over the same period year ago, when the kill was 1.970 million head. A +9% increase is significant, but the kill last week was the second lowest of the calendar year. The previous low was the holiday week of New Years. It is also the 3rd straight week that the kill has gone down.

Average weights were 263.6 lbs. last, compared to 267.4 lbs. last year. This is the 5 straight week of declining average weights.

The average price last week was $54.20 per cwt. For the same period last year, the average price was $54.30 per ctw. This is the second straight week, and the only time this year, that this year’s average price has been within $1.00 of the previous year’s average. Since the week of March 17 the average price has risen from $37.19 to its’ present level.

The 14/16 belly average experienced a 5th straight week of +$5.00 per cwt. increases and closed at $85.20 per cwt. For the same period year ago, the 14/16 belly average was $99.60 per cwt.

With Mother’s Day in sight and the first of the month adds, the market started off this week pretty active. The market is holding steady to full steady. Whole birds and WOGs are fair and supply is adequate for most needs. Chunk meat and breast trim are seeing more activity and supplies are getting tighter. Movement on wings are dependent on size. Drums, legs and thighs continue to be strong. Leg meat and thigh meat also are strong. June exports on leg quarters have started in come in and are being reported at higher contract prices.

Whole birds, both toms and hens continue to be tight. Smaller sized hens are extremely hard to secure. The dark meat lines are active with drums and thighs receiving the most interest. Consumer packaged breasts are being booked for this month and later with higher price levels.

The week started out with predictions of a lower market. Pundits felt demand would fall short of production. As the week closes, some discounts have been noted but the market did not soften as much they thought it would.

The week’s slaughter is close to last week’s. Live cattle traded at $.92 cwt. In the north, a $1.00 cwt lower. Trade has not developed in the other regions. The reductions that have been seen are mostly in the chuck complex. A 65 load offer on flat rounds was out this week. Eye of round is being offered also. Strip loins are still showing steady to higher although fills appear to have improved somewhat.

The market is steady.

Milk production, YTD 2008 is up 3.7% over 2007. The herd size increased by 1.7% compared to 2007 YTD. Production per cow increased 0.7% in March compared to March 2007. YTD 2008 it is up 2.0% over 2007. The milk feed ratio was 1.90. This is down from last month. This is the lowest number since the USDA started this tracking 20 years ago! The ratio is the amount of 16% dairy feed needed to produce 1 pound of milk. 3 or higher is considered positive for dairy expansion. Cheddar production is down 2.5% compared to last year.

The cheese markets moved back into the $1.90’s during April. Most experts had predicted more downward pressure by this time. Many are now calling for $1.75 floor with an upside potential into $2.20 by this fall. Weather and demand will be key factors in the culmination of these predictions. With school closing and with milk production continuing to be strong we should see some inventory start to build which should moderate prices in the short run. The key elements here are exports and 40# cheddar block production. Through Feb. of 2008 cheddar exports totaled 8.6 million pounds or 204 loads of cheese moving out of the U.S. and therefore unavailable for trade on the C.M.E.

Cheddar block production was down during Jan. & Feb. of 2008. The supply has been controlled by plant closure, changes in production mix and by controlling milk inventory for production to order.

The block and barrel spread averaged $.02 in favor of blocks in 2006. In 2007 the spread was $.0182 favoring blocks. YTD in 2008 the spread is $.0253 favoring blocks. Historically the spread should be $.03-$.05 cents in favor of the block. The butter market continues to show strong moving into the mid $1.40’s. Domestic demand is strong and export activity has been very high. YTD exports are up 26 million pounds or approximately 650 truck loads over last year. Strong production should cap prices in 2008.

Through Thursday the block was at $1.9606 which is up slightly, by $.0096, from last week’s average of $1.9510. The barrel was up $.041 over the previous week, as of Thursday. It was $1.9550 through Thursday as opposed to $1.9140 last week. Butter was at $1.4280 last week and it closed at $1.4538 through Thursday of this week, up $.0258. N.F.D.M., both Grade A and Extra grade, averaged $1.42 through Thursday compared to $1.3950 last week, up $.025 also.

Retail demand, though still rated as fair, is reported to be improving. Trading activity is being completed at levels that support existing quotations. Breaking stock is being acquired within current ranges as well. Liquid egg product sector is still adjusting to lower raw materials cost.

The Thursday’s North East Urner Barry was at $1.08 per dozen on large and $.99 on medium. This is down $.06 on large and $.03 on medium from the previous Thursday.

The market is still settling.

Due to the rising cost of salt, driven by a higher than normal demand during the winter months and a short term decline in availability, we may see some price increases in salt and related blends that contain salt. The rising resin market and fuel are also expected to contribute to an overall estimated 7.5% increase in pricing in the coming months.

Higher standards of living in developing countries has increased demand for food in these countries and is the principle driver of higher prices across the world according to Washington sources. Higher standards of living lead to increased demand for meat that requires more commodities to feed the livestock which uses more commodities and drives prices higher. Some critics believe that the diversion of corn to ethanol is the principle cause for price increases, however, of the 43% increase in world food prices, bio-fuel production only accounts for 1.5%. The vast majority is due to increased demand, increased energy prices, and foreign weather related problems. The US consumes about 20 million barrels of oil per day, for the first time in history, combined consumption of European countries has exceeded that of the US. Economic advisors still maintain that the impact of biofuel production on food prices will diminish over time. A cap of 15 billion gallons has been placed on the production of corn-based ethanol, anything over that would have to come from switchgrass, woodchips, and cellulosic sources that would not have any effect on food crops.

Whole peeled are almost gone. Another major supplier has withdrawn and supplies are severely restricted. Further processed alternatives to whole peeled like diced, strips, and chopped are in abundance with reasonable prices. Whole peeled will be available again in August.

Extremely tight supplies of whole whites on all sizes . Many suppliers are out. There will be some light harvesting in May but nothing on a grand scale. Packing should begin again in earnest around the end of August. Every indication is that the new crops will be smaller than this year. Other cuts are still in good supply.

Prices are continuing to increase due to frost concerns in California. Packers are limiting supplies as they take stock of the damage of the freeze. Expect the prices to increase if the damage is significant.

Expect increased prices as farmers are demanding more for growing the products. As corn and soy are still so valuable land isn’t available for beans. To get bean land packers must pay much higher prices and are getting smaller amounts of land than in years past. Expect less product at much higher prices in the months to come.