Hog Outlook
Ron Plain and Scott Brown
Ag Economics, University of Missouri
September 18, 2015
Retail pork prices averaged $3.834 per pound in August. That was up 6.5 cents from July, but down 36.6 cents compared to August 2014. The record for retail pork prices came in September 2014 at $4.215 per pound. Early fall typically has the highest retail pork prices of the year.
The average live price for 51-52% lean hogs in August was $55.91/cwt. That was down 30 cents from the month before and down $24.48 from a year ago.
The lower prices for pork and hogs are not surprising. Year-to-date pork production is up 7.4%.
August was a good month for pork retailers. Compared to a year ago, August hog prices were down 30.5%, the farm-to-wholesale price spread was down 2.9%, but the wholesale-retail price spread as up 2.9%.
Calculations by Lee Schulz at Iowa State University estimated the average profit for market hogs sold during August by Iowa farrow-to-finish operations at $20.27 per head. August was the fifth consecutive profitable month. The August breakeven price was estimated to be $48.34/cwt (live) or $64.45/cwt (carcass).
The national negotiated barrow and gilt price on the morning report today was $65.64/cwt, up $1.16 from last Friday morning. The eastern corn belt averaged $65.80/cwt this morning. There were no negotiated price quotes this morning for the western corn belt or for Iowa-Minnesota.
Peoria had a top live price today of $44/cwt, unchanged from last Friday. The top price today for interior Missouri live hogs was $46/cwt, down 75 cents from the previous Friday.
This morning's pork cutout value was $83.53/cwt FOB the plants. That is down 84 cents from the week before. Packer margins continue to be very good. This morning's national negotiated hog price was only 78.6% of the cutout value.
This week's hog slaughter totaled 2.278 million head, up 11.7% from last week which was light because of the Labor Day holiday and up 11.7% from the same week last year.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 280.6 pounds, up 3.2 pounds from a week earlier, but down 1.3 pounds from a year ago. This was the 25th consecutive week with weights lighter than last year.
It was a good week for hog futures. The October lean hog futures contract settled today at $71.05/cwt, up $3.725 for the week. Surprisingly, the October contract is well above the current cash market. December hog futures ended the week at $64.15/cwt, up $1.50 from the week before. February hogs gained $1.725 this week to close at $68.375/cwt. The April contract ended the week at $72.10/cwt. Hog futures prices imply a temporary shortage of hogs is coming next month.
The December corn futures contract lost 9.5 cents this week to close at $3.7725/bushel.