Ron Plain Hog Outlook: Mixed Week For Hog Prices.

Ron Plain and Scott Brown
University of Missouri

June 5, 2015
==========================

Domestic meat demand has been strong in recent months, but export demand has been weak. Domestic pork demand was up 2% in April. April was the 28th consecutive month with demand stronger than a year earlier. Export demand for U.S. pork was down 10% in April.

U.S. pork exports were up 10.9% in April with big increases in shipments to South Korea, Japan and Mexico. This was the first month since June with export tonnage higher than a year ago. U.S. pork imports were up 10.5% in April. This was the 14th consecutive month with imports above the year-earlier level. During April, 23% of U.S. pork production was exported and imports equaled 4% of production.

Hog imports from Canada were up 17.2% in April with the increase mostly coming from more slaughter hogs rather than feeder pigs.

This was a mixed week for hog prices. Thursday's negotiated carcass price for plant delivered hogs averaged $78.60/cwt which is 94 cents lower than a week earlier. Peoria had a top live price today of $54/cwt, $1 lower than last Friday. The top price today for interior Missouri live hogs was $55/cwt, down 75 cents from the previous Friday. The national average negotiated barrow and gilt purchase price on the morning report today was $78.43/cwt, up 95 cents from last Friday. There were no regional negotiated price quotes this morning.

This morning's pork cutout value was $85.41/cwt FOB the plants. That is down 67 cents from the week before and down $34.18 from a year ago.

Packer margins tightened a bit this week. This morning's national negotiated hog price equaled 91.8% of the cutout value.

Hog slaughter this week totaled 2.124 million head, up 14.4% from the week before and up 10.3% from same week last year. Year-to-date hog slaughter is up 5.9% and pork production is up 5.7%.

Since March 1, barrow and gilt slaughter has averaged nearly 1.5% above the level implied by the March inventory survey. Look for USDA to revise upward the size of last fall's pig crop in their next hog inventory report.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 282.9 pounds, up 2.5 pounds from the week before, but down 3.8 pounds from a year ago. This was the tenth consecutive week with weights lighter than last year.

The June lean hog futures contract closed today at $81.67/cwt, down $2.15 for the week. July hog futures ended the week at $81.12/cwt, down $2.33 from the week before. August hogs lost $1.68 this week to close at $80.82/cwt. The October contract settled at $70.42/cwt.

USDA estimates that 95% of corn acres had been planted by May 31.

The May corn futures contract settled at $3.605/bushel today, up 9 cents for the week. The September corn contract ended the week at $3.675.

Source: AGEBB