Ron Plain: Hog Outlook

Ron Plain and Scott Brown
Ag Economics, MU
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Because Christmas falls on Friday, this weekly summary covers only Monday-Thursday of this week.

Last week's hog slaughter was a record 2.493 million head, up 2.8% from last week, up 7.7% from the same week last year, and up 0.9% from the old record of 2,469,770 head slaughtered during the week ending on December 22, 2007. Slaughter was record high in part because most packers are giving their workers both the 25th and 26th off for Christmas holiday. Two days off this week pulled hogs into last week's slaughter.

USDA's December Hogs and Pigs report found slightly fewer market hogs than the pre-release trade forecasts. USDA said the December 1 market hog inventory was up 0.7%. The trade expected up 1.5%. USDA said the breeding herd was up 1.1% from a year ago.

Pigs per litter during September-November averaged 10.53 head, up 2.9% from a year ago and record high for the third consecutive quarter.

USDA estimated fall (September-November) farrowings were 4% fewer than last year. They predicted winter farrowings will be down 1.9% and spring farrowings down 0.1%. When 4% fewer litters are combined with 2.9% more pigs per litter, the fall pig crop ended up 1.2% smaller than last year.

In total, the hog inventory report implies 2016 hog slaughter will be very close to the 116.452 million head record set in 2008.

The national negotiated barrow and gilt price on the morning report today was $47.40/cwt, down 41 cents from last Friday morning. The western corn belt averaged $48.34/cwt this morning, up 25 cents from last Friday morning. Iowa-Minnesota averaged $48.95/cwt, up 90 cents from Friday. There was no negotiated price quote this morning for the eastern corn belt.

There was no Peoria hog market today. The top price Thursday for interior Missouri live hogs was $32.25/cwt, down $1.50 from the previous Friday.

Thursday morning's pork cutout value was $69.49/cwt FOB the plants. That is down $2.36 from the week before. Loin and belly prices were higher; but ham prices were lower. This morning's national negotiated hog price was only 68.2% of the cutout value.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 283.7 pounds, down 0.4 pound from a week earlier and down 1.5 pounds from a year ago.

The February hog futures ended the week at $58.30/cwt, up $1.675 from the week before. April hogs gained $3.025 this week to close at $65.075/cwt. The June lean hog futures contract ended the week at $77.60/cwt, up $2.55 from the preceding Friday.

The March corn futures contracted settled at $3.645 per bushel today. That is down 10 cents from last Friday.

Source: AGEBB