Ron Plain Hog Outlook: Growing U.S. Economy.

Hog Outlook

Ron Plain and Scott Brown
University of Missouri
March 6, 2015

The U.S. economy added 295,000 jobs during February. That should be positive for domestic meat demand.

The inventory data on the number of hogs in Canada at the start of 2015 were released this week. Canada started the year with 13.165 million hogs. That is up 1.7% from a year ago. Their breeding herd was 0.5% larger than a year earlier.

The Canadian inventory increase is less than for the U.S. hog herd. USDA said the U.S. swine inventory was up 2.0% on December 1 with a breeding herd that was 3.6% larger than 12 months earlier. Because the U.S. herd is five times the size of the Canadian herd, the combined U.S./Canadian swine herd, which is up 3.1% for the breeding herd and up 1.9% for all hogs and pigs, is close to the U.S. numbers.

Friday morning’s pork cutout value was $68.58/cwt FOB the plants. That is down $1.40 from the week before and down $42.51 from a year ago. This is the seventh consecutive week with a lower cutout value.

Wholesale pork belly prices are less than half of what they were a year ago and are the lowest since November 2009. Is the huge increase in bacon demand that started five years ago coming to an end? Wholesale prices say yes, retail prices say no. January retail bacon prices were more than a dollar per pound higher than either boneless pork chops or boneless ham.

Thursday’s negotiated carcass price for plant delivered hogs averaged $64.01/cwt which is 93 cents lower than a week earlier and $40.25 lower than a year ago.

Because of confidentiality rules, there were no national or regional negotiated hog carcass price reports this morning. Peoria had a top live price today of $42/cwt, $4 higher than seven days ago. The top price Friday for interior Missouri live hogs was $46.75/cwt which is down $1.50 from the previous Friday.

Hog slaughter this week totaled 2.222 million head, down 1.5% from the week before, but up 7.2% from same week last year. Hog slaughter has been above the year ago level for the last seven weeks. Compared to a year ago, pork production during the last seven weeks was up 6.8%. Since December 1, hog slaughter has been 1.3% higher than implied by the last hog inventory survey.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.2 pounds, down 0.4 pound from the week before, up 2.4 pounds from a year ago, and up 8.1 pounds from two years ago. This was the 100th consecutive week that Iowa-Minnesota weights have been heavier than a year earlier.

Hog futures were lower this week. The April lean hog futures contract closed today at $66.12/cwt, down $1.35 for the week. May hog futures ended the week at $77.25/cwt, down $2.65 from the week before. June hogs lost $2.82 this week to close at $80.05/cwt. The July contract ended the week at $80.52/cwt.

Corn futures were lower for the week. The March corn futures contract ended the week at $3.79/bu, down 5 cents for the week.