Hog Outlook
Ron Plain and Scott Brown
Ag Economics, MU
August 19, 2016
The average price of pork at retail during July was $3.781 per pound. That is 1.1 cents higher than in June and 1.2 cents higher than in July 2015. The wholesale-retail price spread was $2.146 in July. That is the lowest of any month since July 2014. A tight price spread is good for hog prices; but of course, hog prices will come under pressure if the spread rebounds to normal levels.
The average live price for 51-52% lean hogs was $56.26/cwt in July. That was $2.14 lower than in June, but 7 cents higher than in July 2014.
In the August WASDE, USDA predicted 2017 pork production will be 2.4% higher than this year, and this year's production will be 1.7% higher than last year. They expect carcass barrow and gilt prices to average around $63/cwt this year and $58/cwt next year.
Following seven weeks of decline, slaughter hog prices were higher this week. The national negotiated barrow and gilt price averaged $61.87/cwt on the morning report today, up $1.81 from a week earlier. The western corn belt averaged $63.11/cwt this morning, up 85 cents from last week. Iowa-Minnesota also averaged $63.11 this morning. There was no regional price quote this morning for the eastern corn belt.
The top hog price today at Peoria was $37/cwt, down $2 from a week ago. Today's top price for interior Missouri live hogs was $45.00/cwt, up $1.50 from last Friday.
Friday morning's pork cutout value was $74.93/cwt FOB the slaughter plants. That is down 33 cents from the week before. Loin and butt prices were lower, but ham and belly prices were higher than the previous Friday. This morning's national negotiated hog price is 82.6% of the cutout value.
This week's hog slaughter totaled 2.291 million head, up 2.5% from last week, up 2.7% from the same week last year, and the most ever for a week in August.
The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 274.6 pounds. That is down 1.1 pounds from the week before, down 0.9 pound from the same week last year, and the lightest for any week since early October 2013. Light weights indicate producers are doing a good job of keeping marketings current in the face of falling hog prices.
Hog futures moved higher this week. The October lean hog futures contract ended the week at $61.925/cwt, up $1.925 from the preceding Friday. Today, December hogs settled at $57.45/cwt, up $2.50 from last Friday. The February contract settled at $61.85, up $2.85 for the week.
USDA's Crop Progress report says that 74% of corn acres were in good or excellent condition on August 14. That is the same as a week earlier and 5 points higher than on that date last year.
The September corn futures contract gained 12 cents this week to close at $3.3425 per bushel. December futures closed 10.75 cents higher than last Friday at $3.4375/bu. The March 2017 contract ended the week at $3.535 per bushel.