Hog Outlook

Ron Plain and Scott Brown
University of Missouri
October 24, 2014

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The World Trade Organization has once again ruled that the U.S. Country of Origin Labeling (COOL) rules for livestock are a violation of our international trade agreements. It appears the U.S. has three options: 1. stall for time by appealing the WTO decision, 2. live with Canada and Mexico imposing tariffs on goods imported from the U.S. and 3. rewrite our COOL rules for livestock. The last time the WTO ruled against the U.S. on COOL the U.S. chose options 1 then 3. (Obviously our COOL rewrite did not satisfy Canada, Mexico or the WTO.) I expect the same course of action this time.

Retail prices of pork were record high in September for the seventh consecutive month. Pork averaged $4.215 per pound last month. That is up 1.5 cents from the month before and up 42.3 cents from September 2013. Weekly pork production has been trending higher since early July. Are record retail prices slowing movement?

The average live price for 51-52% lean hogs was $74.36/cwt in September. That is down $6.03 from the month before, but up $6.52 from a year ago.

Stocks of pork in cold storage were down 4.0% on September 30 compared to a year ago. Frozen stocks of beef, chicken and turkey were also below year-ago levels.

The pork cutout value was sharply lower again this week. This morning's cutout was $98.20/cwt FOB the plants, down $14.56 from last Friday, down $25.28 from two weeks ago, but still $3.46 higher than a year ago. Loins, butts, hams and bellies were all lower this week. Wholesale ham prices have lost an astonishing 35% of their value in two weeks.

Hog prices were lower this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $90.28/cwt, down $7.90 from last week. There was no morning price quotes today for the eastern corn belt, the western corn belt or for Iowa-Minnesota. Peoria had a top live price today of $67/cwt and interior Missouri's live top today was $66.75/cwt which is $5.25 lower than last Friday. This morning's hog carcass price was 91.9% of the cutout value.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.9 pounds, up 0.4 pound from the week before and 7.8 pounds heavier than the same week last year.

This week's hog slaughter totaled 2.141 million head, down 2.1% from the week before and down 5.3% from the same week last year.

The December hog contract ended the week at $90.25/cwt, down 32 cents from the previous Friday. February hogs gained $1.32 this week to close at $88.87/cwt. The April lean hog futures contract settled at $89.20/cwt, a gain of $1.70 from the previous Friday. May hogs ended at $89.25/cwt.

December corn gained 5 cents this week to close at $3.53. March corn settled at $3.6675 per bushel.

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