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Ron Plain Hog Outlook: U.S. Hog Inventory Jumps.

Dec 23, 2016

Ron Plain and Scott Brown
Ag Economics, MU
December 23, 2016

USDA's December Hogs and Pigs report said the nation's hog inventory was larger than most expected. USDA says the breeding herd inventory was up 1.5% and the market hog inventory was up 4.0% compared to December 1, 2015. The total hog inventory was up 3.7%. The average of pre-release trade forecasts was for the breeding herd to be up 0.2%, market hogs up 2.0%, and the total herd up 1.7%. The futures market closed lower on the news.

USDA said the number of litters farrowed was up 3.9% during the fall (Sep-Nov) quarter. They said farrowing intentions for December-February were up 1.4% and March-May farrowing intentions were up 1.0%.

The report said pigs per litter during September-November averaged a record 10.63, up 0.9% year-over-year. The fall pig crop was up 4.8% from a year ago.

The market hog weight groups were: 180+ pound market hogs up 2.5%, 120-179 pounders up 4.0%, 50-119 pounds up 4.5%, and market hogs weighing less than 50 pounds up 4.4% compared to December 1, 2015.

This week's hog slaughter totaled 2.154 million head, down 13.9% from last week, but up 26.8% from the same week last year which included Christmas Day.

The national negotiated barrow and gilt carcass price averaged $51.77/cwt on the morning report today, down 11 cents from a week earlier, but up $4.37 from a year ago. The western corn belt averaged $49.40/cwt this morning, down $2.42 from a week ago. Neither the eastern corn belt nor Iowa-Minnesota had a morning price quote today.

Today's top price for interior Missouri live hogs was $36.00/cwt, up 75 cents from last week. The Peoria hog market was closed today.

Friday morning's pork cutout value was $80.59/cwt FOB the slaughter plants. That is up $2.41 from the week before and up $10.75 from a year ago. This morning's national negotiated hog carcass price is 64.2% of the cutout value.

The average slaughter weight of barrows and gilts in Iowa-Minnesota-South Dakota last week was 279.8 pounds. That is down 0.9 pound from the week before and down 3.9 pounds from the same week last year.

Hog futures closed lower this week following news of the hog inventory report. The February lean hog futures contract ended the week at $63.20/cwt, down $1.50 from the preceding Friday. April hogs settled at $65.875/cwt, down $2.425 from last Friday. The May contract settled at $71.20, down $2.70 for the week. June hogs settled at $75.575/cwt today.

Corn futures ended the week 10.5 cents lower than last Friday. The March corn futures contract settled at $3.4575 per bushel down 10.5 cents for the week. May corn futures closed at $3.525/bu, also down 10.5 cents from last Friday. July corn futures ended the week 10.5 cents lower at $3.60 per bushel. September corn settled at $3.6725/bushel.

Source: AGEBB