Ron Plain and Scott Brown
University of Missouri
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USDA's Foreign Ag Service released 2015 projections for global meat production and trade a couple of weeks ago. Projections show an increase in world pork production of 1.1% next year, compared to a 1.4% decline for beef production and 1.5% growth for chicken. China and the European Union continue as the world's top two pork producers, with the U.S. number three. Projected growth of 5.1% for the U.S. in 2015 trails only that of Russia (6.4%) among major producers. China and to a lesser extent Mexico and South Korea are expected to increase pork imports next year, while Brazil, the U.S. and the EU see the largest jump in projected exports.
The U.S. Trade Representative announced this week that a final agreement on the Trans-Pacific Partnership (TPP), a trade agreement being negotiated by 12 Pacific Rim countries including the United States, is not expected to be announced in the coming month. A USDA/ERS report released this week assessing the impact of eliminating tariffs and tariff-rate quotas by 2025 (one hypothetical TPP scenario) found that U.S. meat export value could be $1 billion higher due to TPP by 2025. The value of U.S. meat imports would grow about one-fourth of that amount. Crucial to any timeline of concluding TPP is whether a trade promotion authority bill can be passed through the U.S. Congress.
Hog prices fell again this week. Though there was no quote for the national average negotiated carcass price for direct delivered hogs on today's morning report, yesterday's quote was $83.68/cwt, down for the thirteenth consecutive day and $6.60 lower than last Friday. There were also no morning price quotes today for the eastern corn belt, the western corn belt or for Iowa-Minnesota.
The pork cutout value was down this week, but not as much as the hogs. This morning's cutout was $96.93/cwt FOB the plants, down $1.27 from last Friday, but $3.32 higher than a year ago. Picnics, bellies and hams gained relative to last Friday, while loins, butts and ribs were down. Thursday's hog carcass price was 85.5% of the cutout value.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.8 pounds, down 0.1 pound from the week before but still 7.0 pounds heavier than the same week last year.
This week's hog slaughter totaled 2.193 million head, up 2.4% from the week before but down 3.4% from the same week last year. This year's year to date slaughter is 5.3% below 2013.
The December hog contract ended the week at $88.02/cwt, down $2.23 from the previous Friday. February closed at $88.05, down 82 cents. The April lean hog futures contract lost 5 cents to $89.15/cwt, and May hogs gained $1.15 this week to $90.40/cwt.
Today's Ag Prices report showed that the preliminary October corn price fell for the fifth consecutive month, coming in at $3.28. However December corn closed today at $3.77, up 24 cents from last Friday and at the highest close since mid-August. Meanwhile December soybean meal futures finished at $389 per ton, up $39 from last week and $90/ton higher than last month's close.
Source: AGEBB