Ron Plain: Hog Outlook

Ron Plain and Scott Brown
University of Missouri
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USDA's September hogs and pigs report said the nation's inventory of hogs was down 2.3% on the first day of September compared to a year ago. USDA said the number of market hogs was down 2.7%, but the breeding herd was up 1.8% compared to September 2013. The average of the pre-release trade forecasts were for the breeding herd to be up 1.4% and the market hog inventory down 3.8%. USDA said the number of sows farrowed during June-August was up 0.6% but pigs per litter were down 1.6% from a year ago. Farrowing intentions for September-November are for an increase of 4.0%. December-February farrowing intentions are up 3.8% compared to last winter. As expected, USDA revised down their estimate of last winter's pig crop by 980,000 head to bring it in line with summer hog slaughter.

USDA's September Cold Storage report said there was 546.3 million pounds of pork in cold storage at the end of August. That is 2.4% more than the month before, but 0.5% less than a year earlier. Stocks of frozen pork tend to be at their annual low at the end of July. Pork bellies in cold storage were up 135.7% from a year ago. The large stocks of frozen bellies have been a serious drag on summer belly prices. Compared to August 31, 2013, beef in cold storage was down 20.1%, chicken was down 13.1% and stocks of frozen turkey were down 15.0%.

Hog prices were higher this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $101.30/cwt, up $1.29 from last week and up $9.36 compared to a year ago. There was no morning price quotes today for the eastern corn belt, the western corn belt nor Iowa-Minnesota. Peoria had a top live price today of $70/cwt and interior Missouri's live top today was $75/cwt which is $2.25 higher than last Friday.

The pork cutout value moved higher for the fourth consecutive week. This morning's cutout was $120.17/cwt FOB the plants, up $5.64 from last Friday and $20.79 above a year ago. This morning's hog carcass price was only 84.3% of the cutout value, which should be supportive for Monday's hog price bids.

This week's hog slaughter totaled 2.095 million head, up 2.2% from the week before, but down 4.2% from the same week last year. Hog slaughter has been below the year-ago level for the last 31 weeks. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 282.9 pounds, up 1.0 pound from the week before and 11.7 pounds heavier than the same week last year. This was the 19th consecutive week with weights at least 10 pounds heavier than a year ago.

Hog futures were mixed this week. The October hog futures contract ended the week at $106.52/cwt, up 55 cents from the previous Friday. December hogs lost 38 cents this week to close at $94.47/cwt. The February lean hog contract settled at $89.50/cwt, a loss of $1.90 from the previous Friday. April hogs ended the week at $90.00/cwt.

Source: AGEBB