Ron Plain Hog Outlook Report

Dec 20, 2015

Hog Outlook

Ron Plain and Scott Brown
Ag Economics, MU
December 18, 2015

This week's hog slaughter totaled a record 2.493 million head, up 2.8% from last week, up 7.7% from the same week last year, and up 0.9% from the old record of 2,469,770 head slaughtered during the week ending on December 22, 2007. Slaughter will be light next week because of the Christmas holiday.

Iowa State University calculations estimate the average Iowa market hog sold during November lost $14.44 per head. That is the first month of red ink since March. Lee Schulz estimates the cost of production for November marketings at $45.53/cwt live or $60.70/cwt of carcass.

The average price of pork at retail during November was $3.917 per pound. This was down 5.6 cents from the month before and down 14.7 cents from a year ago.

The average live price for 51-52% lean slaughter hogs in November was $42.01/cwt, down $10.67 from the month before and down $21.75 from a year ago.

The larger drop in hog prices than retail prices has caused price spreads to widen. The farm to retail price spread was a record $3.188 per pound at retail during November. This was up 13.6 cents from the month before and up 22.3 cents from a year ago.

The farm-wholesale price spread was a record 73 cents per retail pound in November, up 8.5 cents from October and up 13.4 cents from a year ago.

The wholesale-retail price spread was $2.458 per pound in November, up 5.1 cents from October, up 8.9 cents from a year ago, and the fourth highest ever.

The national negotiated barrow and gilt price on the morning report today was $47.81/cwt, down $2.12 from last Friday morning. The western corn belt averaged $48.09/cwt this morning, down $2.13 for the week. Iowa-Minnesota averaged $48.05/cwt. There was no negotiated price quote this morning for the eastern corn belt.

Peoria had a top live price today of $28/cwt, unchanged from last Friday. The top price today for interior Missouri live hogs was $33.75/cwt, down 75 cents from the previous Friday.

This morning's pork cutout value was $71.85/cwt FOB the plants. That is down $3.03 from the week before. Loin prices were higher; but ham and belly prices were lower. This morning's national negotiated hog price was only 66.5% of the cutout value.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.1 pounds, down 0.3 pound from a week earlier and down 1.3 pounds from a year ago.

The February hog futures ended the week at $56.625/cwt, down $3.925 from the week before. April hogs lost $2.65 this week to close at $62.05/cwt. The June lean hog futures contract ended the week at $75.05/cwt.

The March corn futures contracted settled at $3.745 per bushel today. That is down 0.75 cents from last Friday.