Ron Plain and Scott Brown
University of Missouri
February 28, 2014
It has been a fabulous week for hog prices. The national average negotiated carcass price for direct delivered hogs on the morning report today was $98.03/cwt, up $9.66 from last Friday, up $15.49 from two weeks ago, and up $27.60 from a year ago. Both Iowa-Minnesota and the western corn belt had an average of $100.36/cwt this morning. The eastern corn belt did not have a price quote this morning. Peoria had a top live price today of $63/cwt. Zumbrota, MN topped at $64/cwt. The top price Friday for interior Missouri live hogs was $66.75, up $3.75 from the previous Friday.
Friday morning's pork cutout value was $104.67/cwt FOB the plants, up $7.29 from the week before and up $23.36 from a year ago. This morning's hog carcass price averaged 93.7% of the cutout value.
Hog futures also set new record highs this week. The April lean hog futures contract settled at $106.85/cwt today, up $7.50 from the previous Friday. May hog futures ended the week at $111.40/cwt, up $4.40 from the week before. June hogs gained $3.97 to close at $112.22. The July contract ended the week at $111.45/cwt. August closed at $111.10/cwt.
U.S. pork demand was up 4.7% in 2013 to the highest level since 2005. However, domestic pork demand is still 4.7% lower than 15 years ago. Pork is the only one of the major meats with lower domestic demand than in 1998.
Overall meat demand in 2013 was up 3.0% to the highest level since 2007, which was before the last recession.
Export demand for U.S. pork in 2013 was down 4.9% compared to the year before. However, 2013 export demand for U.S. pork was 333.1% greater than 15 years ago, which is a larger increase than for beef, chicken or turkey.
Hog slaughter this week totaled 2.169 million head, up 2.7% from the week before and up 0.3% compared to the same week last year.
The average live weight of barrows and gilts in Iowa-Minnesota last week was 282.2 pounds, up 1.0 pound from a week earlier and up 6.0 pounds from a year ago.
This is the seventh consecutive week with pork production above year ago. So, why are hog and pork prices so far above last year? My assumption is that meat processors are buying ahead in anticipation of PEDv induced short supplies this summer.
The last three weeks have added 921 farms to the list of PEDv positive hog operations.
March corn futures ended the week at $4.575/bushel, up 4.5 cents from the week before. May corn settled at $4.635/bushel. The July corn futures contract ended the week at $4.675/bushel.
March soybean meal ended the week at $467.90/ton, up $12.10 for the week. May meal futures closed at $457.70/ton.