Ron Plain Hog Outlook: USDA Expects Higher Pork Production.

Ron Plain and Scott Brown
University of Missouri
=====================

Today's USDA WASDE report increased expected 2015 pork production by 0.5%, but left 2016 production essentially unchanged. In their first forecast since the June inventory report, they predict 7.6% more pork this year than last and 0.5% more pork in 2016 than this year. USDA expects barrow and gilt prices to average close to $50/cwt live this year and in the upper $40s next year.

U.S. pork imports were down 2.3% in May. More pork was imported from Canada, but less from Poland and Denmark than in May 2014. Pork exports during May were up 1.5% compared to 12 months earlier. The increase in exports was due to a big jump in pork shipments going to South Korea. May pork imports equaled 4.4% of U.S. production and exports equaled 23.5% of production.

During the first 5 months of the year, pork imports were up 19.2% and exports were down 5.7% compared to January-May 2014.

Hog imports were up 6.7% in May.

Domestic pork demand was down 0.9% in May and foreign demand for U.S. pork was down 11.6%. This was the first decline in domestic pork demand since December 2012. Export demand was down for the tenth consecutive month.

Thursday's negotiated carcass price for plant delivered hogs averaged $77.35/cwt which is $4.14 higher than a week earlier. There was no national negotiated barrow and gilt price quote on the morning report today.

The western corn belt and Iowa-Minnesota both averaged $76.63/cwt for negotiated purchases this morning. The western corn belt was $2.81 higher than last week. There was no eastern corn belt negotiated price quote this morning.

Peoria had a top live price today of $49/cwt, $1 higher than last Friday. The top price today for interior Missouri live hogs was $53.50/cwt, up 75 cents from the previous Friday.

This morning's pork cutout value was $80.80/cwt FOB the plants. That is up 32 cents from the week before. Loin and ham prices were lower this week and bellies higher.

Packer margins are tight. This morning's western corn belt negotiated hog price equaled 94.8% of the cutout value.

This week's hog slaughter totaled 2.079 million head, up 12.0% from last week and up 11.7% from the same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 279.0 pounds, up 0.4 pound from a week earlier, but down 5.2 pounds from a year ago. This was the fifteenth consecutive week with weights lighter than last year.

The July lean hog futures contract closed today at $78.97/cwt, up 20 cents for the week. August hog futures ended the week at $73.65/cwt, down $2.72 from the week before. October hogs lost $3.82 this week to close at $62.45/cwt. The December contract settled at $59.97/cwt.

Corn futures moved higher again this week. The July corn contract settled at $4.2725/bushel, up 8 cents from last week. December corn ended the week at $4.45/bushel.

Source: AGEBB