Ron Plain: Hog Outlook

Jul 18, 2014

Ron Plain and Scott Brown
University of Missouri

Pork cutout value set new daily record highs on Wednesday, Thursday and Friday of this week. This morning's pork cutout value was $137.87/cwt FOB the plants, up $3.20 from the week before, up $38.08 from a year ago, and up 78 cents from yesterday's record. Wholesale ham prices, $141.88/cwt, also were record high today.

Iowa State University calculations estimate the typical market hog slaughtered in June cost $56.80/cwt live to raise and earned a profit of $93.04 per head when sold. That breaks the old record profit of $92.35/head set in March. The four months with the largest profits per hog are the last four months.

Domestic meat demand was up 4.6% in May compared to a year earlier. On average, domestic demand for red meat and poultry has been up 3.0% over the last 12 months. May domestic demand for pork was up 10.1% compared to May 2013. On average pork demand over the last 12 months was up 5.6%. Export demand for U.S. pork was up 10.6% in May compared to a year ago. The average for the last 12 months is up 11.9%.

Hog prices backed down from last week's record level. The national average negotiated carcass price for direct delivered hogs on the morning report today was $127.20/cwt which is down $1.74 from last week, but up $32.98 from a year ago. The western corn belt averaged $127.09 this morning. Iowa-Minnesota averaged $126.97/cwt. There was no morning price quote today for the eastern corn belt. Peoria had a top live price today of $90/cwt. The top price for interior Missouri live hogs was $91.25/cwt which was the same as the previous Friday.

This morning's hog carcass price equaled 92.3% of the pork cutout value.

Hog slaughter totaled 1.833 million head this week. That was down 1.4% from the week before and down 8.9% from the same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 285.5 pounds. That was up 1.3 pounds from the week before and a record 13.5 pounds heavier than a year ago. It was the 9th consecutive week with weights at least 10 pounds heavier than a year ago.

Hog futures were mostly lower this week. The August hog futures contract ended the week at $127.07/cwt, down $1.60 from the previous Friday. October hogs lost 25 cents this week to close at $113.55/cwt. The December contract ended the week at $103.60/cwt down 75 cents for the week. The February lean hog contract settled at $99.27/cwt.

This week's USDA Crop Progress report said that 76% of U.S. corn acres were in good or excellent condition on July 13. That is up 1 point from the week before and 10 points higher than on the same date last year.

The September corn futures contract closed at $3.71 per bushel today which was 7 cents lower than last Friday. December corn ended the week at $3.785/bushel.

Source: AGEBB

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