Hog Outlook: Cash hog prices also were higher this week

USDA released the results of their June hog inventory survey this afternoon. They said the market hog inventory was down 5.1% and the breeding herd down 0.6% compared to a year earlier. These were lower than expected. The pre-release trade forecasts were for the market hog inventory to be down 3.4% and the breeding herd to be up 1.6% compare to June 1, 2013. Look for continued high hog prices.

There were 575 million pounds of pork in cold storage at the end of May. That was 2% less than the month before and 12.7% less than a year ago. The big exception was pork bellies, which were up 57% compared to May 31, 2013.

The summer rally in hog and pork prices continues. Wednesday's cutout value, $133.67/cwt, was the second highest ever. Friday morning's pork cutout value was $131.89/cwt FOB the plants, up $5.23 from the week before and up $20.61 from a year ago.

Cash hog prices also were higher this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $124.66/cwt which is up $7.55 from the previous Friday, up $27.37 from a year ago, and the highest price since early April. The western corn belt and Iowa-Minnesota both averaged $125.28/cwt this morning. There was no morning price report for the eastern corn belt. Peoria had a top live price today of $85/cwt. The top price Friday for interior Missouri live hogs was $89/cwt which was $6 higher than the previous Friday. This morning's hog carcass price averaged 94.5% of the cutout value.

Hog slaughter this week totaled 1.91 million head, up 0.6% from the previous week, but down 5.4% compared to last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 285.0 pounds. That was down 2.0 pounds from the week before, but 11.0 pounds heavier than a year ago. It was the 64th consecutive week with Iowa-Minnesota live hog weights above the year-earlier level.

Hog futures were mostly higher this week. The July hog futures contract ended the week at $130.90/cwt, up $3.08 from the previous Friday. August hogs gained 67 cents this week to close at $129.82/cwt. The October contract ended the week at $110.90/cwt up $1.18 for the week. The December contract settled at $95.60/cwt.

This week's USDA Crop Progress report said that 74% of U.S. corn acres were in good or excellent condition on June 22. That is down 2 points from the week before, but 9 points higher than on the same date last year.

The July corn futures contract lost 10 cents this week to close at $4.43. The September contract ended the week at $4.42, down 6 cents from the previous Friday. December corn futures ended the week at $4.47/bu.

Source: AGEBB