Ron Plain and Scott Brown
Ag Economics, MU
September 2, 2016
Prestage Foods of Iowa has obtained approval from the Board of Supervisors for Wright County Iowa to build a hog slaughter plant near Eagle Grove, Iowa. The $240 million plant is expected to begin operations in the second half of 2018.
Calculations by Lee Schulz at Iowa State University estimate the average Iowa market hog sold for a profit of $19.36 during July. July was the sixth profitable month in a row for farrow to finish operations. Dr. Schulz estimates the average cost of production for July marketings was $62.15/cwt of carcass or $46.61/cwt on a live weight basis.
Slaughter hog prices were lower this week. The national negotiated barrow and gilt price averaged $57.10/cwt on the morning report today, down $2.96 from a week earlier, down $10.64 from a year ago, and the lowest price since late January. There were no regional price quotes this morning for the eastern corn belt, western corn belt, or Iowa-Minnesota.
The top hog price today at Peoria was $37/cwt, unchanged from a week ago. Today's top price for interior Missouri live hogs was $42.00/cwt, down $2.25 from last Friday.
Friday morning's pork cutout value was $77.19/cwt FOB the slaughter plants. That is up 88 cents from the week before. Loin, ham and butt prices were higher, but belly prices were lower than the previous Friday. This morning's national negotiated hog price is 74.0% of the cutout value.
This week's hog slaughter totaled 2.259 million head, up 0.1% from last week and up 3.5% from the same week last year. Last month's hog slaughter was the largest ever for the month of August.
Year-to-date hog slaughter is up 0.5%. Because of lighter weights, year-to-date pork production is down 0.1%.
The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 276.0 pounds. That is up 1.3 pounds from the week before, but down 1.0 pound from the same week last year.
Hog futures were lower this week. The October lean hog futures contract ended the week at $60.75/cwt, down 57.5 cents from the preceding Friday. Today, December hogs settled at $55.375/cwt, down $1.25 from last Friday. The February contract settled at $60.10, down 85 cents for the week. June hogs settled at $75.525 today.
USDA's Crop Progress report says that 75% of corn acres were in good or excellent condition on August 28. That is the same as a week earlier and 7 points higher than on that date last year.
Corn futures were a bit higher this week. The September corn futures contract gained 0.25 cents this week to close at $3.165 per bushel. December corn futures closed 3.5 cents higher than last Friday at $3.285/bu. The March 2017 contract ended the week at $3.385 per bushel, up 4 cents for the week.
Source: AGEBB