Hog Outlook

Ron Plain and Scott Brown
University of Missouri
September 12, 2014

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The September USDA crop report estimated the U.S. average corn yield at a record 171.7 bushels per acre. They estimated soybean yield at a record 46.6 bushels per acre. The old yield records for both crops were set in 2009 at 164.7 bushels for corn and 44.0 bushels for soybeans.

USDA lowered their forecast of 2014 pork production a tiny bit and lowered their forecast of annual average hog price by $2.50 to $77-78/cwt of live weight. They also lowered their live hog price forecast for next year to $67-73/cwt.

July pork exports were down 2.5% and pork imports were up 2.4% compared to a year ago. During July, the U.S. exported 22.0% of pork production. Imports equaled 4.4% of production. Live hog imports were up 1.7% during July.

Through the first 7 months of the year, U.S. pork exports are up 6.0% compared to January-July 2013. That is remarkable given the record prices this year. The big growth market for pork exports is Mexico which accounts for 70% of the increase. Pork imports are up 7.5%. Imports of live hogs from Canada were down 6.8% during the first 7 months of the year.

Domestic pork demand was up 4.0% in July. That was the 19th consecutive month with pork demand above the year-ago level.

After 7 weeks of decline, hog prices are higher for the second week in a row. The national average negotiated carcass price for direct delivered hogs on the morning report today, $100.75/cwt, is up $5.53 from last week and up $10.29 compared to a year ago. The eastern corn belt average price this morning was $96.38/cwt. The western corn belt averaged $103.27/cwt and Iowa-Minnesota's morning average hog price was $103.29/cwt. Peoria had a top live price today of $66/cwt. There was no interior Missouri price quote this morning.

The pork cutout value was higher again this week. This morning's cutout was $106.55/cwt FOB the plants, up $3.73 from last Friday and $8.58 above a year ago. This morning's hog carcass price was 94.6% of the cutout value, which could put pressure on Monday's bids.

This week's hog slaughter totaled 2.053 million head, up 15.3% from the week before due to last week's Labor Day holiday, but down 5.4% from the same week last year. Hog slaughter has been below the year ago level for the last 29 weeks. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 282.1 pounds, up 1.5 pounds from the week before and 11.4 pounds heavier than the same week last year. This was the 17th consecutive week with weights at least 10 pounds heavier than a year ago.

Hog futures were steady to higher this week. The October hog futures contract ended the week at $105.70/cwt, up 8 cents from the previous Friday. December hogs gained 85 cents this week to close at $96.30/cwt. The February lean hog contract settled at $93.55/cwt, a gain of $2.13.

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