Ron Plain: Hog Outlook And Review

Ron Plain and Scott Brown
Ag Economics, MU
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U.S. pork imports were up 11.4% in August and pork exports were up 6.5% compared to 12 months earlier. The increase in exports was largely due to increased shipments to Mexico. Canada supplied most of the increase in pork imports. Imports equaled 4.7% of August pork production while exports equaled 19.2% of production. During the first eight months of 2015, pork exports were down 3.1% and imports were up 12.2% compared to January-August 2014.

Through August, live hog imports were up 15.5% with 11.5% more weaner/feeder pigs being imported and 35.9% more other hogs than during the first eight months of 2014.

Domestic demand for pork was up in August, but export demand was down for the 13th consecutive month. U.S. per capita expenditures for pork have been up for 31 of the last 32 months.

The October WASDE reduced USDA's estimate of 2015 corn production by 30 million bushels and cut the soybean production estimate by 47 million bushels. USDA raised the 2015-16 marketing year corn price forecast by 5 cents to $3.50-$4.10 per bushel, but left the soybean price forecast unchanged at $8.40-$9.90 per bushel.

USDA raised their prediction of 2015 pork production by 55 million pounds and put their forecast of the 2015 average price for barrows and gilts to $50.82/cwt. They are predicting 1.4% more pork in 2016 and an average price for market hogs that is $1 to $4/cwt lower than this year.

The national negotiated barrow and gilt price on the morning report today was $69.82/cwt, down a penny from last Friday morning. The western corn belt averaged $70.14/cwt this morning, down 57 cents for the week. Iowa-Minnesota averaged $70.48/cwt, down 23 cents from a week ago. There were no negotiated price quotes this morning for the eastern corn belt.

Peoria had a top live price today of $49/cwt, up $5 from last Friday. The top price today for interior Missouri live hogs was $48.25/cwt, unchanged from the previous Friday.

This morning's pork cutout value was $88.34/cwt FOB the plants. That is up $1.83 from the week before with loins, hams and bellies all higher. This morning's national negotiated hog price was only 79.0% of the cutout value.

This week's hog slaughter totaled 2.29 million head, up 0.9% from last week and up 6.8% from the same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 280.3 pounds, up 0.6 pound from a week earlier, but down 4.5 pounds from a year ago. This was the 28th consecutive week with weights lighter than last year.

The October lean hog futures contract settled today at $73.83/cwt, up 48 cents for the week. December hog futures ended the week at $66.13/cwt, up 75 cents from the week before. February hogs gained 73 cents this week to close at $68.95/cwt.

The December corn futures contracted settled at $3.9125 per bushel today. That is up two cents from last Friday.

Source: AGEBB