Ron Plain: Hog Outlook

Dec 12, 2014

Ron Plain and Scott Brown
University of Missouri

There were few significant changes in this month's USDA price forecasts (WASDE). USDA held steady their forecast for the marketing year average corn price at between $3.20 and $3.80 per bushel. They raised the midpoint of their soybean meal forecast by $10 to $360/ton. USDA cut their prediction of the 2014 average live hog price by 38 cents to $76.22/cwt. Their forecast for 2015 live hog prices is unchanged with an average between $63 and $68/cwt.

Record U.S. pork prices this year are having the expected impact on international trade. Year-over-year pork exports were down 11.9% in October with a large decline in shipments to Japan and China. Pork imports were up 40.2% in October compared to 12 months earlier. The increase was largely due to more pork from Canada. In October, pork exports equaled 18.0% of U.S. pork production and imports equaled 5.1%

During the first 10 months of 2014 pork imports are up 12.9% and pork exports are up 0.4%.

Friday morning's pork cutout value was $92.06/cwt FOB the plants, down 68 cents from the week before, but up $5.52 from a year ago. Loins and hams were lower. Belly prices were higher. The national average negotiated carcass price for direct delivered hogs on the morning report today was $80.54/cwt, down $3.58 from last Friday, but up $2.93 from a year ago. The western corn belt averaged $78.12/cwt on today's morning report. There were no negotiated carcass prices reported this morning for the eastern corn belt or Iowa-Minnesota.

Peoria had a top live price today of $58/cwt. The top price Friday for interior Missouri live hogs was $58.50/cwt which was 75 cents lower than the previous Friday.

This morning's hog carcass price averaged 87.5% of the cutout value.

Hog slaughter this week totaled 2.254 million head, up 0.8% from the week before, but down 2.9% compared to the same week last year. This was the 42nd consecutive week with hog slaughter below the year-earlier level.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week, 285.4 pounds, was unchanged from a week earlier and up 3.0 pounds from a year ago. That was the 88th consecutive week with weights above the year-earlier level.

The December lean hog futures contract closed today at $87.52/cwt, up 92 cents for the week. February hog futures ended the week at $83.25/cwt, down $2.37 from the week before. April hogs lost $2.60 this week to close at $84.35/cwt. The May contract ended the week at $89.00/cwt. June hogs closed at $91.15/cwt.

Corn futures were higher this week. The December contract gained 15 cents this week to end at $3.9625 per bushel. March corn settled at $4.075/bu, 13 cents higher than the previous Friday. May corn futures settled at $4.155/bu.

Source: AGEBB

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