Ron Plain: Hog Outlook

Ron Plain and Scott Brown
University of Missouri
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USDA will release the results of their latest hog inventory survey on June 26. My prediction: breeding herd up 1.8% and market hog inventory up 8.5%. Lower death loss from the PED virus is the reason for the big gap in the breeding and market herd numbers.

Calculations by Lee Schulz at Iowa State University estimate the average market hog sold in Iowa during May cost $48.75/cwt of live weight to raise and sold at a profit of $26.25 per head. May was the 12th consecutive month with a lower breakeven price, and the third profitable month this year.

The average retail price of pork during May was $3.696 per pound. That is down 7.3 cents from April, down 40.3 cents from May 2014, and the lowest retail price since July 13.

The average live price for 51-52% lean hogs in May was $57.23/cwt. That was up $12.10 from April, but down $24.52 from May 2014.

Through mid-June, 2015 hog packer gross margins were lower than last year, but above the long term average.

The Federal Reserve Bank left interest rates unchanged at their June meeting. They also lowered their forecast of 2015 economic growth from a range with a midpoint of 2.5% to a midpoint of 1.9%. The economy shrunk by 0.7% in the first quarter. In general, low interest rates are good for farmers and economic growth is good for meat demand.

Thursday's negotiated carcass price for plant delivered hogs averaged $76.23/cwt which is $1.19 lower than a week earlier.

Peoria had a top live price today of $50/cwt, $1 lower than last Friday. The top price today for interior Missouri live hogs was $55/cwt, unchanged from the previous Friday.

The national average negotiated barrow and gilt purchase price on the morning report today was $75.05/cwt, down $1.68 from last Friday. The western corn belt averaged $75.83/cwt for negotiated purchases this morning, down $1.68 from a week ago. There was no eastern corn belt or Iowa-Minnesota negotiated price quote this morning.

This morning's pork cutout value was $82.18/cwt FOB the plants. That is down $2.84 from the week before and down $44.48 from a year ago. Boston Butts lost 19% of their value this week.

This morning's national negotiated hog price equaled 91.3% of the cutout value.

Hog slaughter this week totaled 2.140 million head, up 0.6% from the week before and up 13.5% from same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 280.9 pounds, down 1.2 pounds from twelfth consecutive week with weights lighter than last year.

The July lean hog futures contract closed today at $75.75/cwt, down $2.30 for the week. August hog futures ended the week at $73.82/cwt, down $2.90 from the week before. October hogs lost $3.08 this week to close at $64.27/cwt. The December contract settled at $61.65/cwt.

Source: AGEBB