Hog Outlook
Ron Plain
University of Missouri
April 20, 2012
World pork production is expanding. USDA's Foreign Agriculture Service is predicting that this year's world pork production will be up 2.7% from 2011. Several of our key foreign markets are showing growth in their hog numbers. China, the third largest buyer of U.S. pork last year, is expected to increase its pork production by 4.0% this year. Pork production in South Korea, last year's number five foreign customer, is expected to be up 17%. Increased foreign production could hurt U.S. pork exports. Last year we exported a record 22.8% of our pork production. Given the weak U.S. economy, strong exports are crucial to hog prices.
Calculated domestic pork demand during February was up 0.6% compared to a year earlier. Export demand for U.S. pork was up 1.6% in February. Packer demand for hogs was 1.6% higher this February than last.
Retail pork prices in March averaged $3.49 per pound, down half of a penny from February, but up 13.3 cents from March 2011.
The average live price for 51-52% lean hogs in March was $61.86/cwt, down $2.08 from February and 77 cents lower than in March 2011.
Hog prices ended this week mostly steady with the previous Friday. The national average negotiated carcass price for direct delivered hogs on the morning report today was $79.39/cwt, down 28 cents from last Friday. The eastern corn belt averaged $79.23/cwt this morning. The western corn belt averaged $80.70/cwt. Iowa-Minnesota had an average price of $80.66 on the morning report. Peoria topped at $55 and Zumbrota a top of $54/cwt today. The top for interior Missouri live hogs Friday was $58/cwt, down $1.25 from the previous Friday.
The pork cutout value was lower this week. USDA's Thursday afternoon calculated cutout value was $77.46/cwt, down $1.36 from the previous Thursday. Hams were higher this week. Bellies, butts and loins were lower. Packer margins remain tight. The national average hog carcass price this morning is 2.5% above the pork cutout value.
Hog slaughter totaled 2.084 million head this week, up 2.0% from the week before and up 1.2% compared to the same week last year. Barrow and gilt carcass weights for the week ending April 7 averaged 206 pounds, unchanged from the week before and up one pound from a year ago. The average barrow and gilt live weight in Iowa-Minnesota last week was 276.4 pounds, up 0.3 pounds from a week earlier, up 4.2 pounds from a year ago, and above a year earlier for the 21st consecutive week.
Friday's close for the May lean hog futures contract was $87.50/cwt, down $2.62 from the previous Friday. The June lean hog futures contract settled at $87.40/cwt, down $2.82 for the week. July hogs ended the week at $87.95 and August settled at $88.50/cwt.