By Curt Thacker

  Of DOW JONES NEWSWIRES


  KANSAS CITY (Dow Jones)--Continuing losses are causing producers to send more
breeding hogs to slaughter, a move that is pressuring sow prices lower.

  Volatile grain prices last year and a slip in pork demand because of the
weaker global economy have put pressure on hog prices and a strain on livestock
producers. The situation worsened for the pork industry following outbreaks of
A/H1N1 influenza beginning in April because of concerns among consumers about
the consumption of pork, even though health officials said it was safe to eat
properly prepared pork.

  U.S. swine producers collectively have lost about $4.5 billion in equity
since late 2007. That amounts to about $21 per marketing hog sold over that
period, according to the National Pork Producers Council.

  Larger numbers of sows are being culled from the herd at a time when barrow
and gilt slaughters are also increasing. Barrows are young castrated male hogs
and gilts are young unbred female hogs. The increase in sow marketings is
causing sharp declines in prices at some locations early this week. Quotes
Tuesday are off by $4 to as much as $10 per hundredweight, compared with late
last week. There are also anecdotal reports that some sow buyers weren't
quoting prices early Tuesday due to overruns and that certain processors aren't
scheduling additional deliveries yet.

  Sow prices at the Peoria, Ill., terminal market Tuesday fell $3 to $4 per
hundredweight.

  A market manager in the western corn belt said prices in the low $30s per
hundredweight were paid for light-weight sows last week. But he expects the
market to fall below $20 some time this week. Prices for sows of that weight
group dropped to nearly $20 at some locations by midday Tuesday.

  Analysts have said pork production needs to be cut significantly, from
7%-10%, in order to bring hog supplies down and prices back up to profitable
levels for producers. Some in the industry said that U.S. producers have so far
done too little trimming of their herds and have instead relied mainly on
cutbacks in Canadian hog operations to reduce overall supplies.

  The U.S. Department of Agriculture's weekly slaughter data show year-to-date
sow slaughter at 11% below a year ago. Some of the reduction is due to fewer
sows imported for slaughter from Canada, analysts said. In the latest week of
actual slaughter data, which lag estimates by two weeks, sow slaughter was up
about 3.3% from last year.

  In recent years, imports of Canadian feeder pigs and barrows and gilts have
amounted to between 8.5% and 9.3% of U.S. slaughter. Despite deep reductions in
Canadian supplies, U.S. slaughter has dropped only modestly, while heavier
carcass weights have offset part of the decline in numbers.

  Market analysts and livestock dealers said agricultural lenders are planning
to soon visit many of the hog operations to discuss market conditions and
review their equity status.

  If an operation hasn't already reduced its breeding herd, the lender may urge
the producer to do so, analysts said. For operations that have too little
equity left to survive the continued harsh market conditions, lenders may feel
they have no alternative but to call in the loan and no longer offer credit.

  A longtime livestock buyer viewed the larger offerings of culled breeding
animals and lower prices for them now as a bullish signal for the second half
of 2010, if producers continue to trim their herds. Heavier culling of sows for
only a few weeks won't be enough to fix the market out ahead, the buyer said.

  Ron Plain, agricultural economist at the University of Missouri, said the
industry needs to pull 6% more out of the breeding herd to achieve a 10%
decline from the peak. That 6% represents about 350,000 head. Packers can
process about 74,000 head per week and recent slaughter rates have been around
64,000, so pushing the number back up to capacity level would require about 30
weeks to get through 350,000 additional sows, he said.