Ron Plain Hog Outlook: Hog Futures Were Lower.

Ron Plain and Scott Brown
Ag Economics, MU
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China is in the process of reinstating six U.S. pork slaughter plants and eight cold storage facilities for shipment to China. That should help boost U.S. pork exports.

There is a lot of meat in cold storage right now. According to USDA's monthly Cold Storage report, there were 656 million pounds of pork in cold storage at the end of September. That is the same as the month before and up 19.2% compared to a year ago. This is the most frozen pork ever for the end of September and the most for any month since April 2015.

Frozen beef stocks were up 31.3% year-over-year and frozen chicken up 27.9% at the end of September. The amount of turkey in cold storage was down 6.4% compared to September 2014. Turkey production is down this year because of avian influenza.

The amount of red meat in cold storage was up 2% from the month before and up 24% from a year ago. The total amount of red meat in storage was the most ever for the end of September and the total frozen stocks of red meat and poultry was the most for any month ever (at least in my 25 year data set).

Calculations by Lee Schulz at Iowa State University put the average cost of production for farrow-to-finish operations at $46.50/cwt (live weight) and the average profit at $12.29 per head for hogs marketed during September. September was the sixth consecutive profitable month.

The average negotiated price for barrows and gilts purchased on Thursday for slaughter plant delivery was $69.26/cwt, down 54 cents from a week earlier.

There was no national or regional negotiated barrow and gilt prices on the morning reports today.

Peoria had a top live price today of $46/cwt, down $3 from last Friday. The top price today for interior Missouri live hogs was $48.25/cwt, unchanged from the previous Friday.

This morning's pork cutout value was $86.43/cwt FOB the plants. That is down $2.81 from the week before. Loins and hams were lower, bellies higher.

This week's hog slaughter totaled 2.317 million head, down 0.04% (1,000 head) from last week, but up 8.1% from the same week last year. Year-to-date hog slaughter is up 8.1%, but because of lighter slaughter weights, year-to-date pork production is up only 7.3%.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 282.2 pounds, up 1.1 pound from a week earlier, but down 2.7 pounds from a year ago. This was the 30th consecutive week with weights lighter than last year.

Hog futures were sharply lower on Friday. The December lean hog futures contract settled today at $63.60/cwt, down $1.98 for the week. February hog futures ended the week at $66.15/cwt, down $2.30 from the week before. April hogs lost $1.98 this week to close at $69.975/cwt.

The December corn futures contracted settled at $3.7975 per bushel today. That is up 3 cents from last Friday.

Source: AGEBB