Ron Plain Hog Market Outlook: Cash Hog Prices Were Mixed.

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

The University of Michigan's July 2015 consumer confidence index released today shows a decline from last month of 3.1%. The index in July stands at 93.1 which makes the index stand at its highest 8-month average since 2004. Although the index declined on a monthly basis, it is still 13.8% higher than a year ago and hopefully allows pork demand to continue at its current strong pace.

The release of the prices received and prices paid indexes for livestock production in the latest Agricultural Prices report delivered this week is a reminder of the squeeze that has been occurring for the livestock sector in 2015. The prices received index for livestock production reached a peak of 135 percent (2011 base) in October 2014 and has fallen by 14 points to 121 percent in June 2015 as livestock prices have fallen. The decline in the prices paid index for the livestock sector is much less with only a 1 point drop over the same period. The prices received index for hogs leads the livestock sector decline with a 38 percentage point decline over the past 12 months.

Soybean crop conditions are at 62% good/excellent in this week's survey trailing last year's survey for the same period by 9%. Poorer conditions in Illinois, Indiana, Missouri and Ohio have caused this year's conditions to lag 2014. USDA will provide their first survey-based yield estimates with the August reports set to be released on August 12th. This could be important for soybean meal prices in the months ahead.

Cash hog prices were mixed to steady for the week. Thursday's average negotiated carcass price for plant delivered hogs was $74.57/cwt, up 30 cents from last week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $73.27/cwt. This was virtually unchanged from a week ago, and $43.64 lower than a year ago. The western corn belt price lost $0.95/cwt. on the week to $73.63/cwt. There was no quote for the eastern corn belt. Peoria had a top price today of $48/cwt, while interior Missouri live hogs had a top of $54.25/cwt.

The pork cutout value moved $3.72 higher for the week, with this morning's cutout at $89.21/cwt FOB the plants. Bellies advanced 2.9% this week. Today's value was still $38.11 lower than a year ago. This morning's national negotiated hog price equaled 82.1% of the cutout value, a drop of 3.7% vs. last week.

Hog slaughter for this week came in at 2.137 million head, up 14.3% from the same week last year. Year to date slaughter is 7.5% above 2014. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 277.8 pounds, a drop of 5.9 pounds from the same week last year.

The August lean hog contract ended the week at $78.53/cwt, up $0.90/cwt from the previous Friday. October closed at $63.70, down 37.5 cents. The December lean hog futures contract lost $1.05/cwt to fall to $60.48/cwt, and February hogs finished at $66.73/cwt.

September corn closed today at $3.71/bu, down 21 cents from last Friday. December closed at $3.81.

Source: AGEBB