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Ron Plain: Pork Outlook Report

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

February 20, 2015

The Labor Department is getting involved with negotiations on a contract for west coast dock workers. If an agreement isn't reached before then, negotiations will move to Washington DC on Monday.

Calculations by Lee Schulz at Iowa State University put the average profit for Iowa hogs sold during January at $13.28 per head. January was the 13th consecutive profitable month. Dr. Schulz puts the breakeven price at $49.83/cwt live or $66.44/cwt of carcass. This is the lowest cost of production since December 2007.

Over the last 9 months the U.S. dollar has strengthened against most major currencies. It is up 10% against the Japanese Yen and up 21% against the Euro. The trade weighted exchange rate against all major currencies is up 16.5%. This strength in the dollar will make it more expensive for foreigners to buy U.S. products and cheaper for Americans to buy foreign products.

Friday morning's pork cutout value was $70.84/cwt FOB the plants, down $2.32 from the week before and down $26.54 from a year ago. Belly prices were sharply lower again this week and are down 39% from a year ago. This is the fifth consecutive week with a lower cutout value.

Thursday's negotiated carcass price averaged $58.10/cwt which is $1.37 higher than a week earlier.

Because of low sales volume and confidentiality rules, there were no eastern corn belt or Iowa Minnesota negotiated price reports this morning. The western corn belt had a morning average negotiated carcass price of $59.46/cwt. The national average on the morning report was $58.28/cwt.

Peoria had a top live price today of $36/cwt, $2 lower than seven days ago. The top price Friday for interior Missouri live hogs was $40/cwt which is down $1.50 from the previous Friday.

Hog slaughter this week totaled 2.285 million head, up 2.8% from the week before and up 8.2% from same week last year. Hog slaughter has been above the year ago level for six of the last seven weeks. Compared to a year ago, pork production during the last 5 weeks was up 6.9%.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 285.8 pounds, up 0.2 pound from the week before, up 4.6 pounds from a year ago, and up 10.5 pounds from two years ago. Weights have been above year ago each week since March of 2013.

Hog futures were higher this week. The April lean hog futures contract closed today at $67.40/cwt, up $1.38 for the week. May hog futures ended the week at $77.30/cwt, up $1.18 from the week before. June hogs gained $1.17 this week to close at $81.72/cwt. The July contract ended the week at $81.97/cwt.

Corn futures were down slightly this week. The March corn contract lost 2 cents to close at $3.85. May corn ended the week at $3.93 per bushel.

Source: AGEBB


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