Ron Plain and Scott Brown
Ag Economics, MU
October 14, 2016
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In their monthly WASDE forecasts USDA increased by 1.4% their prediction of 2017 pork production. They now expect 3.8% more pork in 2017 than this year's record. They reduced their forecast of 2017 live hog prices by $2.50/cwt to $39-$43/cwt. USDA also increased their forecast of 2017 beef production, but cut their forecast of 2017 broiler production.
Hurricane Matthew dumped a lot of water on North Carolina early this week disrupting hog movement and operations at Smithfield's east coast plants. As a result, weekly hog slaughter is down 118,000 head from last week. This week's hog slaughter totaled 2.304 million head, down 4.9% from last week and down 0.6% from the same week last year. The prior three weeks had slaughter totals above 2.4 million hogs. Presumably, this week's light kill has left lots of hogs for packers to process in coming days.
The reduced hog slaughter was positive for cutout values. Friday morning's pork cutout value was $73.59/cwt FOB slaughter plants. That is up $1.46 from the week before. Loin and ham prices were lower; belly and butt prices were higher.
The decline in hog prices took a break this week as prices held steady, more or less. The national negotiated barrow and gilt price averaged $45.44/cwt on the morning report today, up 22 cents from a week earlier. The western corn belt averaged $47.32/cwt this morning, up $1.81 from last Friday. Iowa-Minnesota averaged $47.35 this morning, up $1.85 for the week. There was no regional price quote this morning for the eastern corn belt. This morning's national negotiated hog price is only 61.7% of the cutout value.
The top hog price today at Peoria was $25/cwt, down $1 from a week ago. Today's top price for interior Missouri live hogs was $30.00/cwt, down $3.00 from last Friday.
The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 281.2 pounds. That is up 0.2 pound from the week before and up 0.1 pound from the same week last year.
Hog futures were mixed this week. The October lean hog futures contract ended the week at $52.600/cwt, up $1.925 from the preceding Friday. December hogs settled at $42.225/cwt, down 37.5 cents from last Friday. The February contract settled at $50.275, up 97.5 cents for the week. June hogs settled at $71.075 today.
USDA has reduced their estimate of 2016 corn production by 36 million bushels to 15.057 billion, which is still a record. They expect the seasonal average farm price of corn to average $3.25 per bushel, give or take 30 cents.
USDA has increased their estimate of 2016 soybean production by 68 million bushels to a record 4.269 billion. They expect Decatur soybean meal to average between $300 and $340 per ton.
Corn futures were higher this week. The December corn futures contract gained 14.5 cents this week to close at $3.5425 per bushel. March corn futures closed 14.25 cents higher than last Friday at $3.6375/bu. May ended the week at $3.7025/bu.
Source: AGEBB