On Thursday, the U.S. senate voted 73 to 27 to end the 45 cent per gallon tax credit for blending ethanol with gasoline and the 54 cent per gallon tariff on importing ethanol. This change is far from being law, but it has the potential to give the livestock industry some relief from record high feed cots. The July corn futures contract lost 87 cents this week to settle at $7.00 per bushel on Friday.
The average retail price of pork in May was $3.484 per pound, up 10.7 cents from April, up 44.1 cents from May 2010, and record high for the second consecutive month. Bacon prices continue to be outstanding. The average retail price of bacon in May, $4.77/lb, was up 10.8 cents from April and 90.8 cents higher than a year earlier. The key factor driving grocery store pork prices higher is a declining per capita pork supply. This year's U.S. supply is expected to be the smallest since 1978. On average, retail pork prices peak around Labor Day. However, given the weak economy, it appears unlikely retail pork prices have much more upside potential.
The average live price for 51-52% lean hogs in May was $68.41/cwt, up 31 cents from April and $5.28 higher than in May 2010. This is the highest monthly average ever for this USDA data series which began in 1996.
Cash hog prices were higher this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $92.23/cwt, up $3.98 from last Friday. The Friday morning price report for the western corn belt was $92.82/cwt. Iowa-Minnesota averaged $92.96/cwt. The eastern corn belt averaged $92.02. Friday's top live hog price at Peoria was $63. Zumbrota's top was $64/cwt. The top for interior Missouri hogs was $64.50/cwt, $3 higher than the previous Friday.
The pork cutout value rose for the second week in a row. USDA's Thursday afternoon calculated pork cutout value was $92.81/cwt, up $2.10 from the previous Thursday. Bellies and butts were higher; loins and hams slightly lower. Packer margins continue to be tight. On average, the hog carcass base price averages 92% of pork cutout. This morning's national average hog carcass price equaled 99% of the pork cutout value.
Hog slaughter totaled 1.973 million head this week, down 1.3% from last week and down 1.5% compared to the same week last year. Barrow and gilt carcass weights for the week ending June 4 averaged 203 pounds, up 1 pound from a week earlier and 1 pound heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 268.6 pounds, down 2.0 pounds from the week before and down 2.4 pounds compared to the same week last year. This is biggest week-to-week weight drop since a 3.6 pound decline for the week ending on June 27, 2009.
The July lean hog futures contract ended the week at $95.65/cwt, up $2.43 from the previous Friday. The August contract settled Friday at $94.85/cwt, up $2.03 for the week. October hogs settled at $87.90.
-Ron Plain