Ron Plain: Hog Outlook - Pork Prices Slumping.

Ron Plain and Scott Brown
University of Missouri

March 13, 2015
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A strong dollar and labor problems at west coast ports had a negative impact on pork exports at the start of 2015. U.S. pork exports were down 21.3% in January compared to 12 months earlier. January pork exports equaled 16.52% of U.S. production, the smallest share since August 2010. Year-over-year pork imports were up 32.3% in January with Canada and Poland accounting for most of the increase. January pork imports equaled 4.37% of production. Imports of weaner/feeder pigs from Canada were up 5.6% in January. Imports of other Canadian hogs were up 54.3%.

Compared to their February forecasts, USDA's March WASDE lowered their estimate of 2015 beef production by 0.7%, increased their pork estimate by 0.1%, and upped expected broiler production by 0.2%. They lowered their estimate of 2015 exports for each of the major meats. USDA is now predicting a 3.1% increase in red meat and poultry production in 2015 compared to last year. That translates into 6.7 pounds more meat per person. USDA lowered by $1/cwt their forecasts of 2015 hog prices and broiler prices.

USDA increased by 50 million bushels each their estimate of corn exports and corn to be fed, but lowered their forecast of corn used for ethanol production by 50 million bushels. They increased their estimate of season average corn price by 5 cents to between $3.50 to $3.90/bu.

Friday morning's pork cutout value was $67.74/cwt FOB the plants. That is down 84 cents from the week before and down $54.91 from a year ago. This is the eighth consecutive week with a lower cutout value.

Thursday's negotiated carcass price for plant delivered hogs averaged $60.64/cwt which is $3.37 lower than a week earlier and $50.88 lower than a year ago.

The western corn belt had a Friday morning average negotiated carcass price of $59.87/cwt. The Iowa-Minnesota average on the morning report today was $60.01/cwt. Because of confidentiality rules, there were no national or eastern corn belt negotiated hog carcass price reports this morning. Peoria had a top live price today of $40/cwt, $2 lower than seven days ago. The top price Friday for interior Missouri live hogs was $45.75/cwt which is down $1 from the previous Friday.

Hog slaughter this week totaled 2.227 million head, up 0.2% from the week before and up 10.0% from same week last year. Hog slaughter has been above the year ago level for the last eight weeks. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.2 pounds, unchanged from the week before and up 2.1 pounds from a year ago.

Hog futures were sharply lower this week. The April lean hog futures contract closed today at $62.10/cwt, down $4.02 for the week. May hog futures ended the week at $71.42/cwt, down $5.83 from the week before. June hogs lost $4.63 this week to close at $75.42/cwt. The March corn futures contract ended the week at $3.74/bu, down 5 cents for the week.

Source: AGEBB