Ron Plain: Hog Market Outlook

Hog Outlook

Ron Plain and Scott Brown
University of Missouri
June 26, 2015

USDA's June Hogs and Pigs report said the nation's market hog inventory is up 9.4% compared to a year ago and the breeding herd is up 1.2%. The pre-release trade forecast was for an 8.9% increase in the market inventory and a 2.1% increase in the breeding herd.

USDA said the June 1 inventory of market hogs weighing 180 pounds or more was up 13.4%, the 120-179 pound inventory was up 11.5%, the 50-119 pound inventory was up 8.7% and the inventory of market hogs weighing 50 pounds or less was up 6.6%.

USDA said March-May farrowings were up 1.4% and pigs per litter were up 6.0% yielding a spring pig crop that is 7.5% larger than March-May 2014. The report predicted summer farrowings will be down 2.5% and fall farrowings down 4.3%.

The June Cold Storage report said there were 653.6 million pounds of pork in cold storage at the end of May. That is down 6.7% from last month's record, but up 13.5% from a year ago. Frozen pork was at record levels early this year as labor troubles slowed exports from the west coast.

The latest USDA Crop Progress report estimates that 71% of the nation's corn acres were in good or excellent condition on June 21. That is down 2 percentage points from last week and down 3 points from a year ago. They said 65% of soybean acres were in good or excellent condition, down 2 points from last week and down 7 points from a year ago. Only 51% of Missouri soybean acres were plants as of June 21.

Hog prices declined for the fourth consecutive week. Thursday's negotiated carcass price for plant delivered hogs averaged $73.42/cwt which is $2.81 lower than a week earlier.

Peoria had a top live price today of $49/cwt, $1 lower than last Friday. The top price today for interior Missouri live hogs was $52.75/cwt, down $2.25 from the previous Friday.

The national average negotiated barrow and gilt purchase price on the morning report today was $72.46/cwt, down $2.59 from last Friday. The eastern corn belt averaged $72.38/cwt for negotiated purchases this morning. There was no western corn belt or Iowa-Minnesota negotiated price quote this morning.

This morning's pork cutout value was $82.35/cwt FOB the plants. That is up 17 cents from the week before, but down $49.54 from a year ago. Loins, hams and butts were lower, but belly prices higher this week. This morning's national negotiated hog price equaled 88% of the cutout value.

Hog slaughter this week totaled 2.143 million head, up 0.4% from the week before and up 12.2% from same week last year. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 279.4 pounds, down 1.5 pounds from the week before, down 5.6 pounds from a year ago, and the lightest for any week since October 2013.

The July lean hog futures contract closed today at $75.45/cwt, down 30 cents for the week. August hog futures ended the week at $72.82/cwt, down $1.00 from the week before.