Hog Outlook
Ron Plain and Scott Brown
Ag Economics, MU
May 13, 2016
USDA's May WASDE predicted 2016 pork production will be up 2.0% from last year and 2017 production will be up 2.6% from this year. Total red meat and poultry production is expected to be up 3.1% this year and up 2.9% next year. More meat should mean lower prices. USDA is forecasting hog prices will be down $3/cwt this year with live hog prices averaging $46-48/cwt. They expect hog prices to be down another $3/cwt or so in 2017. USDA is predicting modest increases in both pork imports and exports this year.
USDA is predicting a record corn harvest of 14.43 billion bushels this fall. That would be 1.5% more than the 2014 record. The forecast of a record harvest is based on the most corn acres since 2013 and a predicted 168 bushels per acre, the third highest yield ever. USDA is forecasting a marketing year average corn price of $3.05 to$3.65 per bushel.
Corn planting is a bit behind last year but ahead of the 5-year average. USDA's weekly Crop Progress report says that 64% of corn acres were planted by May 8. That compares to 45% a week earlier and 69% on that date last year. The five-year average is 50% planted by May 8.
Both cash hog prices and the pork cutout value were higher this week. Friday morning's pork cutout value was $84.29/cwt FOB the plants. That is up $5.56 from the week before and up 73 cents from a year ago. Pork bellies have recovered from the big drop they took a week ago. This morning's national negotiated hog price was 87.1% of the cutout value.
The national negotiated barrow and gilt carcass price averaged $74.22/cwt on Thursday, up $3.23 from a week earlier, but down $5.17 from a year ago. The national negotiated barrow and gilt price averaged $73.39/cwt on the morning report today, up $3.52 from a week earlier. Both the western corn belt and Iowa-Minnesota average $74.24/cwt this morning. There was no negotiated price quote this morning for the eastern corn belt.
The top hog price today at Peoria was $47/cwt, up $2 from last Friday. The top price for interior Missouri live hogs was $49.50/cwt, up 75 cents from a week ago.
This week's hog slaughter was 2.16 million head, down 2.4% from last week, but up 1.6% from the same week last year.
The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 283.2 pounds, down 1.1 pounds from the week before, but up 2.0 pounds from a year ago.
The May hog futures contract gained 5 cents this week to close at $76.85/cwt. The June lean hog futures contract ended the week at $81.95/cwt, up 67.5 cents from the preceding Friday. Today, July hogs settled at $82.55/cwt.
The futures market is more bullish on corn prices than is USDA. The May corn futures contract settled at $3.82 per bushel today, up 6 cents from last week. July corn ended the week at $3.9075/bushel, up 13.25 cents from last Friday. December corn ended the week at $3.9825/bushel.