Ron Plain: Hog Outlook

Ron Plain and Scott Brown
University of Missouri
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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