Ron Plain and Scott Brown
Ag Economics, MU
October 30, 2015
The U.S. economy grew only 1.5% during the third quarter. That is far less than what is needed for robust meat demand. The World Health Organization released a report linking processed meats to an increase in the risk of getting cancer. That isn't good for meat demand either.
It was a down week in the hog market. The average negotiated price for barrows and gilts purchased on Thursday for slaughter plant delivery was $63.10/cwt, down $6.16 from a week earlier.
The national average negotiated carcass price on the morning report today was $60.68/cwt. The western corn belt averaged $59.38/cwt and Iowa-Minnesota averaged $60.07/cwt for negotiated purchases this morning. There was no morning price quote for the eastern corn belt today.
Peoria had a top live price today of $42/cwt, down $4 from last Friday. The top price today for interior Missouri live hogs was $46.75/cwt, down $1.50 from the previous Friday.
This morning's pork cutout value was $80.61/cwt FOB the plants. That is down $5.82 from the week before. Wholesale belly prices were down a whopping $25.52/cwt this week. Pork belly prices usually trend lower at this time of year. Despite this week's decline, belly prices are still above the year-ago level.
Hog prices continue to be weak compared to the cutout value. This morning's national average hog carcass price was only 75.3% of the pork cutout value.
This week's hog slaughter totaled 2.253 million head, down 2.6% (1,000 head) from last week, but up 2.7% from the same week last year. Year-to-date hog slaughter is up 8.0%, but because of lighter slaughter weights, year-to-date pork production is up only 7.2%.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 282.2 pounds, unchanged from a week earlier and down 2.6 pounds from a year ago. This was the 31st consecutive week with weights lighter than last year.
Hog futures were lower this week. The December lean hog futures contract settled today at $59.20/cwt, down $4.40 for the week. February hog futures ended the week at $62.75/cwt, down $3.40 from the week before. April hogs lost $2.55 this week to close at $67.425/cwt.
The December corn futures contracted settled at $3.8225 per bushel today. That is up 2.5 cents from last Friday.
It has been a dry fall in much of the Midwest and that has moved harvest forward quickly. USDA estimates that, as of October 25, 75% of the corn acres and 87% of soybean acres had been harvested. Both numbers are ahead of the average for that date.
Hog producers appear to be doing a good job of managing the PED virus. The number of new cases continues to be lower than at this time last year.