This is probably the factor that is the most negative for both beef and pork prices.

For these same three months, the total supply of pork domestically was up 1.1 percent and beef was down 1.2 percent from a year earlier.

Slaughter of hogs has been running some above our expectations based on the USDA’s Hogs and Pigs report. For example, after adjusting for live hog imports, the slaughter indicates the June-August pig crop was up 101.9 percent from 12 months earlier.

The most recent Hogs and Pigs report shows the June-August 2005 pig crop up 100.4 percent from a year earlier. Therefore, we believe there is a chance that USDA will do some revision in the March report.

Our gilt and sow slaughter data indicated the breeding herd in both September and December 2005 was somewhat larger than the USDA officially estimated.

Our estimate of the March Hogs and Pigs, which will be released on Friday, March 31, is for the total herd to be 102 percent of 2005, market herd 102 percent and breeding herd 102 percent of 12 months earlier.

Our estimate of the March-May farrow is 101 percent of a year earlier. For the June-August farrow, we expect an increase of 2 percent from 2005.

The average retail price of pork in February was up 1.2 percent from January, but down 1.5 percent from February 2005. For the average of January-February 2006, pork retail prices were 2 percent below 12 months earlier.

The processor-retailer margin for January-February this year was up 8.2 percent from 2005. However, the packers’ margin was down 2.6 percent and live hog prices were down a bit over 19 percent.

There continues to be much publicity about Asian flu from poultry.

In the countries that have found this disease, the consumption of chicken has declined sharply in most instances. The reduced exports of chicken is the reason for record cold storage stocks of chicken and reduced exports.

We believe this large supply of low cost poultry is a major portion of the hog industry problems in recent weeks.

Cash hog prices this Friday morning were up 75 cents to down $1.50 compared to seven days earlier. Top live prices Friday morning for select markets were: Peoria $36.50 per cwt., St. Paul $38 per cwt., and interior Missouri $40.25 per cwt.

Weighted negotiated carcass prices this Friday morning were 90 cents to $3.07 lower compared to a week earlier. Weighted average negotiated carcass prices by area Friday morning were: Western Cornbelt $53.33 per cwt., Eastern Cornbelt $55.50 per cwt., Iowa-Minnesota $53.39 per cwt., and nation $54.45 per cwt.

Slaughter was shortened this week by weather and tight packer margins. Saturday slaughter this week was estimated at 2,000 head. Total weekly slaughter under Federal Inspection was estimated at 1.943 million head down 0.3 percent from the same week in 2005.