Ron Plain: Hog Market Outlook

Jul 04, 2014

Ron Plain and Scott Brown
University of Missouri

This report is being written a day early since Friday is Independence Day and there will be no market reports available.

Hog prices, both cash and futures, moved higher this week in reaction to USDA's hog inventory survey. The report said the market hog inventory was down 5.1% which was well below trade expectations (down 3.4%). Summer farrowings were predicted to be up only 0.1%, also a smaller than expected number.

This morning's pork cutout value was $133.74/cwt FOB the plants, up $13.83 from the week before and up $26.19 from a year ago. It tied the record high which was set on April 2.

The national average negotiated carcass price for direct delivered hogs on the morning report today was $126.91/cwt which is up $2.25 from the previous Friday, up $29.67 from a year ago, and the highest price since late March.

The western corn belt averaged $126.21 this morning. Iowa-Minnesota averaged $125.98/cwt on the morning report. There was no morning price quote for the eastern corn belt. Peoria had a top live price today of $87/cwt. Zumbrota topped at $88/cwt. The top price Friday for interior Missouri live hogs was $89.75/cwt which was 75 cents higher than the previous Friday.

This morning's hog carcass price averaged 94.9% of the cutout value.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 285.0 pounds. That was unchanged from the week before and 11.6 pounds heavier than a year ago. It was the 65th consecutive week with Iowa-Minnesota live hog weights above the year-earlier level.

Hog futures were higher this week. The July hog futures contract ended the week at $131.72/cwt, up 82 cents from the previous Friday. August hogs gained $1.78 this week to close at $131.60/cwt. The October contract ended the week at $116.75/cwt up $5.85 for the week. The December contract settled at $102.85/cwt which was $7.25 higher than last Friday.

This week's USDA Crop Progress report said that 75% of U.S. corn acres were in good or excellent condition on June 29. That is up 1 point from the week before and 8 points higher than on the same date last year.

The July corn futures contract lost 26 cents this week to close at $4.17. The September contract ended the week at $4.095, down 33 cents from the previous Friday. December corn futures ended the week at $4.15/bu.

Source: AGEBB

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