Hog Outlook

Ron Plain and Scott Brown
University of Missouri
August 22, 2014

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Statistics Canada says the Canadian hog herd was up 1.3% at midyear with the breeding herd up 0.7% and the market hog inventory up 1.4% compared to a year earlier. Despite the larger breeding herd, their 2014 pig crop is expected to be smaller than last year, almost certainly due to the PED virus.

Calculations by Lee Schulz at Iowa State University indicate the typical Iowa farrow to finish operation earned a record profit of $107.25 per hog sold during July. That is $14.21 above the old record set the month before. The five most profitable months in history have all been this year.

The average price for 51-52% lean hogs was record high in July at $95.17/cwt of live weight, up $6.08 from the previous record set in April of this year.

Retail pork prices set new records in July for the fifth consecutive month. Grocery store pork averaged $4.127 per pound last month, up 1.1 cents from the month before and up 43.1 cents compared to July 2013. Retail bacon prices were 51.5 cents per pound higher than in July 2013. Boneless pork chop prices were 41.4 cents higher than a year ago and boneless ham prices were up 30.6 cents per pound.

Record grocery store prices slow movement which has combined with the ongoing increase in hog slaughter to cause a big drop in hog and pork prices in recent weeks. Hog carcass prices have declined by $34.72/cwt in the last six weeks. During the same period, the pork cutout value is down $27.91/cwt.

The national average negotiated carcass price for direct delivered hogs on the morning report today was $94.22/cwt. That was down $8.54 from last week, but up $2.76 compared to a year ago. The eastern corn belt's morning average price was also $94.22/cwt. Neither the western corn belt nor Iowa-Minnesota reported hog sales on today's morning report. Peoria had a top today of $65/cwt. Interior Missouri live hogs had a top price of $73.50/cwt, down $3.50 compared to last Friday.

The pork cutout value suffered another drop this week. This morning's cutout was $106.76/cwt FOB the plants, down $6.53 from last Friday. Loins, butts, hams and bellies were all lower. The cutout is $8.17 above a year ago. This morning's hog carcass price equaled 88.3% of the pork cutout value.

This week's hog slaughter totaled 1.991 million head, down 1.3% from the week before and down 9.7% from the same week last year. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 282.5 pounds, down 1.3 pounds from the week before, but 10.5 pounds heavier than the same week last year. This was the 14th consecutive week with weights at least 10 pounds heavier than a year ago.

Hog futures also were lower this week. The October hog futures contract ended the week at $92.87/cwt, down $2.08 from the previous Friday. December hogs lost $1.90 this week to close at $87.15/cwt. February hogs ended the week at $86.52/cwt.

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