Hog Outlook
Ron Plain and Scott Brown
University of Missouri
May 1, 2015
This was a fabulous week for hog prices. Thursday's negotiated carcass price for plant delivered hogs averaged $72.96/cwt which is $9.96 higher than a week earlier. The price rally is being driven by a seasonal decline in hog slaughter and a sharp drop in slaughter weights.
Thursday's national negotiated hog price equaled 99.6% of the cutout value. The western corn belt negotiated price was 102% of the cutout value. Needless to say, packer margins are unsustainably tight. Look for packers to cut their slaughter hours.
Hog slaughter this week totaled 2.164 million head, down 0.9% from the week before, but up 7.4% from same week last year. Year-to-date hog slaughter is up 5.6% and pork production is up 5.8%.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 281.8 pounds, down 1.7 pounds from the week before and down 5.7 pounds from a year ago.
Peoria had a top live price today of $48/cwt, $7 higher than last Friday. The top price today for interior Missouri live hogs was $48.25/cwt, up $3.75 from the previous Friday.
Because of low sales volume and confidentiality rules, there were no regional or national negotiated hog carcass price reports this morning.
This morning's pork cutout value was $73.92/cwt FOB the plants. That is up $4.54 from the week before, but down $40.20 from a year ago. For the fourth week in a row, wholesale belly prices are lower than the pork cutout value.
The nation's gross domestic product grew only 0.2% during the first quarter. That could mean a slowdown in meat demand growth lies ahead.
Avian Influenza continues to spread among the nation's poultry flock. This outbreak looks to become the biggest in U.S. history. Increased bird deaths cut supply; but restrictions put in place by foreign buyers hurt demand.
Cash receipts from hog sales by U.S. farms was a record $26.4 billion dollars in 2014. Eight states had more than a billion dollars in cash receipts from hogs: Iowa, Minnesota, North Carolina, Illinois, Indiana, Missouri, Nebraska and Oklahoma.
The May lean hog futures contract closed today at $76.00/cwt, up $4.05 for the week. June hog futures ended the week at $81.25/cwt, up $1.80 from the week before. July hogs gained $1.30 this week to close at $82.05/cwt. The August contract settled at $81.97/cwt.
USDA estimates that 19% of corn acres had been planted by April 26. That is 2 points ahead of last year, but 6 points below the five year average.
The May corn futures contract settled at $3.5975/bushel today which is 4.75 cents lower than a week earlier. September corn ended the week at $3.63 per bushel, off 6.75 cents for the week.