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Ron Plain: Hog Outlook

Ron Plain and Scott Brown University of Missouri
Pork exports amounted to 22.2% of pork production for the third quarter of 2012. This is the seventh consecutive quarter that at least 20% of production has been exported, during a timeframe in which trade has not had the benefit of a significantly weakening dollar which helped boost the large gains in exports during the past decade.

Six countries (Japan, Mexico, China, Canada, South Korea and Russia) have each already purchased more than 200 million pounds of U.S. pork in the first nine months of 2012, and in this tenuous economic climate it is a real plus for the industry to be diversified into so many markets. Chinese imports of U.S. pork have trended lower in 2012 creating the need for increased U.S. exports to other countries to hold total U.S. pork exports at 2011 levels.

Retail pork prices declined in October for the second consecutive month to $3.48 per pound. Prices at the retail level have moved primarily in a sideways pattern since May of 2011. With the sharply higher feed costs that producers have had to bear in recent months, it is imperative that consumers be able and willing to pay more for pork in the months to come if hog prices are to rise to a profitable level.

It was a losing week for virtually all pork and hog prices. The Thursday afternoon calculated pork cutout value was $81.30/cwt, down $5.66 from the previous Thursday. Only ribs showed a slight gain for the week with all other parts falling, especially hams down 15% for the week.

The national average negotiated carcass price for direct delivered hogs on the morning report today was $73.46/cwt, down $5.27 from last Friday. The eastern corn belt was also sharply down $6.25 for the week to $72.85/cwt. The western corn belt and Iowa-Minnesota prices marginally increased to $74.75 and $75.02/cwt. Peoria had a top live price this morning of $51 and Zumbrota had a live top today of $52/cwt. The top for interior Missouri live hogs Friday was $57/cwt, unchanged from the previous Friday. The average hog carcass price was 90.4% of the cutout value.

Hog slaughter this week totaled 2.366 million head, up 0.2% from the week before but down 0.1% compared to the same week last year. Year to date hog slaughter is 2.0% above 2011.

The average barrow and gilt live weight in Iowa-Minnesota last week was 272.6 pounds, 0.5 pounds above a week earlier but down 1.9 pounds from a year ago.

Friday's close for the December lean hog futures contract was $80.65/cwt, down 10 cents from the previous Friday. February hog futures ended the week 65 cents higher at $86.97/cwt. April hogs settled at $91.65/cwt, June at $100.07/cwt.

Source: AGEBB

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