Ron Plain: Hog Outlook

Jun 20, 2014

Ron Plain and Scott Brown
University of Missouri

The average price of pork in grocery stores during May was a record $4.099 per pound. That is up 54.6 cents from a year ago and up 14.9 cents from the old record set the month before.

USDA says the average live price for 51-52% lean hogs in May was $81.76/cwt. That was down $7.33 from the record set in April, but up $15.73 compared to May 2013.

Iowa State University estimates the typical hog sold during May turned a profit of $74.13 per head. This was the third consecutive month above the pre 2014 record. Cost of production for hogs sold in May averaged $56.52/cwt of live weight, up 41 cents from the month before. That was the first increase in the ISU cost estimate since January 2013.

USDA will release the results of their June hog inventory survey next Friday. I'm predicting they will say the breeding herd is up 2.0% compared to a year ago, but the market hog inventory is down 3.6%.

Cash hog prices were higher this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $117.11/cwt which is up $3.62 from the previous Friday. The western corn belt averaged $116.00/cwt this morning. There were no morning price reports for the eastern corn belt or Iowa-Minnesota. Peoria had a top live price today of $80/cwt. The top price Friday for interior Missouri live hogs was $83/cwt which was 75 cents higher than the previous Friday.

Friday morning's pork cutout value was $126.66/cwt FOB the plants, up $5.78 from the week before and up $18.95 from a year ago. This morning's hog carcass price averaged 92.5% of the cutout value.

Hog slaughter this week totaled 1.899 million head, down 0.8% from the previous week and down 4.0% compared to last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 287.0 pounds. That was up 0.3 pounds from the week before and a record 12.0 pounds heavier than a year ago. It was the 63rd consecutive week with Iowa-Minnesota live hog weights above the year-earlier level and the second consecutive week with a record year-over-year increase in weight.

Hog futures were mostly lower this week. The July hog futures contract ended the week at $127.82/cwt, up 82 cents from the previous Friday. August hogs lost $2.12 this week to close at $129.15/cwt. The October contract ended the week at $109.72/cwt down $2.03 for the week. The December contract settled at $96.55/cwt.

This week's USDA Crop Progress report said that 76% of U.S. corn acres were in good or excellent condition on June 15. That is up 1 point from the week before and 12 points higher than on the same date last year.

The July corn futures contract gained 6 cents this week to close at $4.53. The September contract ended the week at $4.48, up 5 cents from the previous Friday. December corn futures ended the week at $4.52/bu.

Source: AGEBB