From Dr. Glen Grimes, University of Missouri Extension Livestock Economist

Gilt and sow slaughter data continued to show the potential for at least a slow reduction in the breeding herd. We need to reduce the breeding head at least five percent from last years level and it may be we need to reduce as much as 10 percent to get pork supplies in line with demand.

If we can keep demand growth for live hogs growing, the five percent reduction will likely get prices back to the profit level for the average cost produce.

Most of the increase in live hog demand this year is due to export growth. Will it be possible to get much if any growth in 2009 following the big growth in 2008? Growth in 2009 will likely be at a relative slow rate following the big gain of 2008 and 2009 exports may be down from 2008.

Exports for January-July we believe have added $15.79 per cwt of hogs slaughtered in the first seven months of this year. The total amount per hog slaughter has been $40.26 per head. This assumes no reduced value compared from years prior to 2008. The total dollar return to the pork industry has been about 2.7 billion dollars in 2008. How much of this growth in income to hog producers can be attributed to the five million plus dollars spent by the pork board for foreign markets development is not easy to calculate but the return per dollar has been big.

Corn price in the futures market dropped to about $4.10 per bushel this week. That compared with near $8 per bushel in June this year. This looks like a buy opportunity for hog producers who do not produce their own feed grain.

USDA reduced its pork export forecast for 2008 by 125 million pounds to 5.318 billion pounds, based on recent weakness in shipments.

Industry analysts have been concerned for weeks that the strengthening dollar, the global recession and China's increased domestic pork production could all weigh on what previously seemed an unstoppable trajectory of increasing pork exports.

In its World Supply and Demand Estimates report, USDA also raised its total pork production forecasts for both 2008 and 2009. It put 2008 production at 23.550 billion pounds, up from 23.495 billion pounds forecast in September. It put 2009 pork production at 23.164 billion pounds, up from 22.999 billion pounds forecast last month.

USDA said stronger than expected increases in pigs per litter have outpaced expected reductions in sow farrowings into early 2009.