Ron Plain Hog Outlook: Hog Prices Steady.

Sep 19, 2014
By Ron Plain

Ron Plain and Scott Brown
University of Missouri
==========================

Retail pork prices set new records last month. The average price of a pound of pork in grocery stores during August was $4.20. That was 7.3 cents higher than the month before and 44.3 cents higher than in August 2013. This was the sixth consecutive month with a new retail price record for pork. Retail beef prices are also record high.

Daily hog slaughter was 2.1% higher in August than in July, but retail pork movement was slowing due to higher retail pork prices. As a result, cash hog prices fell sharply from early July till late August. The wholesale-retail price spread was a record $2.251 per pound in August.

The Iowa State University hog profit series estimates the typical Iowa hog marketed in August earned a profit of $57.45 per head. August profits were sharply lower than the month before, but August was still one of the ten most profitable months. Lee Schulz at ISU estimates the average Iowa cost of production was $54.67/cwt live during August. That was the lowest cost since October 2010.

Hog prices were generally steady this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $100.01/cwt, down 74 cents from last week, but up $7.04 compared to a year ago. There was no morning price quotes today for the eastern corn belt, the western corn belt nor Iowa-Minnesota. Peoria had a top live price today of $67/cwt and interior Missouri's live top today was $72.75/cwt.

The pork cutout value moved higher this week. This morning's cutout was $114.53/cwt FOB the plants, up $7.98 from last Friday and $15.15 above a year ago. This morning's hog carcass price was only 87.3% of the cutout value, which should be supportive for Monday's hog price bids.

This week's hog slaughter totaled 2.05 million head, down 1.5% from the week before and down 5.9% from the same week last year. Hog slaughter has been below the year-ago level for the last 30 weeks. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 281.9 pounds, down 0.2 pound from the week before, but 11.0 pounds heavier than the same week last year. This was the 18th consecutive week with weights at least 10 pounds heavier than a year ago.

Hog futures were steady to lower this week. The October hog futures contract ended the week at $105.97/cwt, up 27 cents from the previous Friday. December hogs lost $1.45 this week to close at $94.85/cwt. The February lean hog contract settled at $91.40/cwt, a loss of $2.15 from the previous Friday. April hogs ended the week at $90.10/cwt.

The December corn futures contract ended the week at $3.315/bushel, down 8 cents for the week. March corn closed at $3.3425, up 6 cents from the previous Friday. The October soybean meal futures contract ended the week at $324.10/ton, down $14.40 for the week.

Source: AGEBB

Video: Will the 2025 USDA December Crop Report Be a Market Mover/Surprise?

Historically, the USDA December crop report is a non-event or another dud report as the USDA reserves any final supply changes to the final report in January of the following year in this case 2026. But after the longest U.S. government shutdown in history at 43 days and no October crop report will they provide more data/surprise and make an exception?
Our China U.S. soybean purchase tracker is now at 26.6% or a total of 3.2 mmt but for traders it’s taking too long to unfold.
The final Stats Canada production report was bearish canola and wheat projection a record crop in both (it adds to the global glut of supplies) and bullish local corn and soybean prices in Ontario/Quebec thanks to a drought. It will not help the fund flow short-term, the USDA may need to offset it?
A U.S. Fed interest rate cut of another 25-basis point next Wednesday (probability 87.1%) could help fund flow and sentiment in stock and ag commodities into year end.
More inflows into Bitcoin this past week saw prices rebound back above 90,000 with support at 82,000 and resistance at 96,000.
A V-shaped bottom in cattle suggest the lows are in after Mexico reported another new world screwworm case. Lower weights, seasonal demand and higher U.S. beef select/choice values with a continued closure of the Mexican border to cattle will result in a resumption of higher cattle futures into yearend.
Australia is expected to produce its 3rd largest wheat crop ever at 36 mmt adding to the global glut of supplies.
Reports of ASF in hogs in Spain the largest pork exporter in Europe could see the U.S. win more pork export business long-term.
If the rains verify into next week of 3-5 inches for Brazil it would go a long way to fixing the dry regions from the last 2-months, but the European weather model has been wrong for the past 2-months!
Natural gas futures are surging to the 3rd price count as frigid hold temps set in.
CDN $ is also surging to end the week on a very resilient economy and better employment numbers suggesting no interest rate cuts next week.
Finally, the CFTC report showed funds were net buyers of soybeans but sellers of corn, canola and wheat. In real time the funds have gone back to selling as they take some profits.