Ron Plain Hog Outlook: Is There Herd Expansion?

Ron Plain and Scott Brown
University of Missouri
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Clemons Food Group has announced plans to build a large new hog slaughter plant in Coldwater, Michigan. The plant is planned to begin operations in late 2017. This will be the nation's first large hog slaughter plant since the Triumph Foods plant opened in St Joseph in January 2006.

USDA's December hogs and pigs report will come out next Tuesday. Trade forecasts have the breeding herd up 3.0% and the market hog inventory up 1.3%.

The average retail price of pork during November was $4.064 per pound. That was 8.5 cents lower than in October but 28.8 cents higher than in November 2013.

The average live price for 51-52% lean hogs was $63.76/cwt in November. That was $11.48 cents lower than in October, but $3.55 higher than in November 2013.

Iowa State University calculations put November cost of production at $50.6/cwt live, the lowest for any month since August 2010. Lee Schulz estimates the typical farrow to finish profit was $39.31 per head marketed in November. Each month of 2014 has been profitable.

Friday morning's pork cutout value was $86.43/cwt FOB the plants, down $5.63 from the week before and down 98 cents from a year ago. Loins, bellies and hams were all lower. In recent days, the pork cutout has been below the year-ago level for the first time since early February.

The national average negotiated carcass price for direct delivered hogs on the morning report today was $75.68/cwt, down $4.86 from last Friday and down $1.28 from a year ago. The western corn belt averaged $75.54/cwt on today's morning report. There were no negotiated carcass prices reported this morning for the eastern corn belt or Iowa-Minnesota.

Peoria had a top live price today of $51/cwt. The top price Friday for interior Missouri live hogs was $57/cwt which was $1.50 lower than the previous Friday.

Hog slaughter this week totaled 2.298 million head, up 2.0% from the week before, but down 2.8% compared to the same week last year. This was the 43rd consecutive week with hog slaughter below the year-earlier level.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week, 285.4 pounds, was unchanged from a week earlier and up 4.1 pounds from a year ago. That was the 89th consecutive week with weights above the year-earlier level.

The February lean hog futures contract closed today at $81.90/cwt, down $1.35 for the week. April hog futures ended the week at $83.20/cwt, down $1.15 from the week before. May hogs lost $1.83 this week to close at $87.17/cwt. The June contract ended the week at $90.42/cwt. July hogs closed at $89.47/cwt.

Corn futures were higher again this week. The March contract gained 3 cents this week to end at $4.105 per bushel. May corn settled at $4.19/bu, also 3 cents higher than the previous Friday. July corn futures settled at $4.26/bu.

Source: AGEBB