Ron Plain: Hog Outlook

Apr 07, 2015

Ron Plain and Scott Brown
University of Missouri

The March Hogs and Pigs report indicates hog slaughter will stay well above the year ago level through August. The inventories of market hogs by weight group were from 6% to 9.4% larger than a year ago.

The death loss from PED was much less this winter than last. A year ago pigs per litter during December-February were down 5.5%. This winter pigs per litter were up 6.7% compared to last year and were, at 10.17 head, the highest ever for the winter quarter.

The number of litters farrowed was up 2.4% in December-February and are predicted to be up 2.1% this spring, but down 2.1% this summer. Producers appear to be responding quickly to profits and losses.

My forecast is for daily hog slaughter to be up 6.5% in the second quarter, up 9.2% in the third quarter, and up 4.1% in the fourth quarter compared to a year before. Look for 2015 hog slaughter to be the second highest ever after 2008.

Friday morning's cutout value was $66.14/cwt FOB the plants. That is up 6 cents from the week before, but down $66.32 from a year ago. This is the first week without a decline in the cutout value since mid January. Today, wholesale belly prices are $66.93/cwt. A year ago wholesale bellies were $202.72/cwt.

Thursday's negotiated carcass price for plant delivered hogs averaged $57.09/cwt which is $1.13 higher than a week earlier, but $68.25 lower than a year ago. Both hog prices and the pork cutout value are less than half of what they were a year ago.

The national average negotiated barrow and gilt carcass price on morning sales today was $55.35/cwt, up 52 cents from last Friday. This morning's price is 83.7% of the pork cutout value. Because of low sales volume and confidentiality rules, there were no eastern corn belt, western corn belt, or Iowa-Minnesota negotiated hog carcass price reports this morning.

Peoria had a top live price today of $35/cwt, the same as last Friday. The top price today for interior Missouri live hogs was $40/cwt which is down 75 cents from the previous Friday.

Hog slaughter this week totaled 2.199 million head, down 3.1% from the week before, but up 9.2% from same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 283.4 pounds, down 0.8 pound from the week before and down 1.6 pounds from a year ago. This was the first week with Iowa slaughter weights below the year-ago level since the week ending on March 30, 2013. Lighter weights make sense given that hog prices are below the cost of production. They also indicate that producers are pulling ahead on marketings.

Hog futures were higher this week in trading that ended early due to the Good Friday holiday. The April lean hog futures contract closed Thursday at $63.17/cwt, up $2.05 for the week. May hog futures ended the week at $68.35/cwt, up 18 cents from the week before. June hogs gained 70 cents this week to close at $75.70/cwt. The July contract settled at $77.05/cwt.

Source: AGEBB

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