Ron Plain and Scott Brown
Ag Economics, MU
July 29, 2016
Large hog slaughter made this a bad week for both hog prices and pork prices. The national negotiated barrow and gilt carcass price averaged $66.62/cwt on Thursday, down $3.26 from a week earlier and down $14.68 from five weeks ago.
Belly prices are an astonishing 31% lower than last week. Friday morning's pork cutout value was $78.85/cwt FOB the slaughter plants. That is down $10.52 from the week before. Loins, butts, hams and bellies were all lower than last Friday.
There were 586 million pounds of pork in cold storage at the end of June. That was down 4.7% from the month before and down 7.7% from a year ago. June was the fifth consecutive month with stocks of frozen pork below the year ago level. On June 30, supplies of beef in cold storage were down 4.9%, chicken up 12.5%, and turkey up 9.3% compared to a year earlier.
The U.S. economy grew only 1.2% during the second quarter according to the U.S. Commerce Department. They revised down their estimates of growth during the fourth quarter of 2015 and the first quarter of 2016 to 0.9% and 0.8%, respectively. These numbers decrease the odds of the Federal Reserve Bank raising interest rates anytime soon. Growth this slow is not good for meat demand. The restaurant performance index was down in June for the second consecutive month.
The national negotiated barrow and gilt price averaged $65.19/cwt on the morning report today, down $3.76 from a week earlier and down $15.08 from five weeks ago. There were no regional prices quotes this morning for the eastern corn belt, the western corn belt, or for Iowa-Minnesota. This morning's national negotiated hog price is 82.7% of the cutout value.
The top hog price today at Peoria was $42/cwt, unchanged from a week ago, but down $6.00 from two weeks earlier. Today's top price for interior Missouri live hogs was $47.25/cwt, down $2.25 from last Friday.
This week's hog slaughter totaled 2.184 million head, up 2.0% from last week, up 2.9% from the same week last year, and I believe, the most ever for a week in July.
The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 277.3 pounds. That is down 0.4 pound from the week before and down 0.5 pound from the same week last year.
The August lean hog futures contract ended the week at $68.975/cwt, down $6.30 from the preceding Friday. Today, October hogs settled at $59.05/cwt, down $4.85 from last Friday. The December contract settled at $54.75, down $3.725 for the week.
USDA's Crop Progress report says that 76% of corn acres were in good or excellent conditions on July 24. That is unchanged from the week before and 6 points higher than the same date last year.
The September corn futures contract lost 0.5 cent this week to close at $3.345 per bushel. December futures closed a penny higher than last Friday at $3.4275/bu. The March 2017 contract ended the week at $3.515 per bushel.
Source: AGEBB