Hog Outlook

Ron Plain and Scott Brown
Ag Economics, MU
June 24, 2016

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USDA released their June hog inventory survey this afternoon. USDA said the nation's hog inventory was up 1.8% at the start of June with the breeding herd up 0.9% and the market hog inventory up 1.9% compared to a year ago. This is the largest June 1 hog inventory of record. They said March-May farrowings were up 1.5% and that producer farrowing intentions for summer and fall were down 2.3% and down 1.1%, respectively.

There made a small downward revision in the market hog inventory in the March report. Since March 1, barrow and gilt slaughter has been roughly 0.5% lower than implied by the March market hog inventory.

Pigs per litter during March-May averaged 10.48 head which is 1.1% more than a year ago. This report was bearish compared to market expectations. USDA's June Cold Storage report said there were 613 million pounds of pork in cold storage at the end of May. That was 3.9% less than the month before and 6.5% less than a year ago.

USDA's Crop Progress report says that 75% of corn acres were in good to excellent conditions on June 19. That is the same as a week earlier and 4 points higher than on that date last year.

The national negotiated barrow and gilt carcass price averaged $81.30/cwt on Thursday, up 95 cents from a week earlier and up $7.88 from a year ago.

The national negotiated barrow and gilt price averaged $80.37/cwt on the morning report today, up 77 cents from a week earlier and up $7.81 from a year ago. There were no regional negotiated price quotes this morning for the eastern corn belt, western corn belt, or Iowa-Minnesota.

The top hog price today at Peoria was $51/cwt, up $2 from last Friday. The top price for interior Missouri live hogs was $55.50/cwt, up 75 cents from a week ago.

Friday morning's pork cutout value was $88.91/cwt FOB the slaughter plants. That is up 28 cents from the week before and up $6.56 from a year ago. Ham and belly prices were higher than last Friday, loins lower. This morning's national negotiated hog price is 90.3% of the cutout value.

This week's hog slaughter was 2.103 million head, down 2.6% from last week and down 1.8% from the same week last year. The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 279.2 pounds. That is down 2.7 pounds from the week before and down 0.2 pound from the same week last year.

The July lean hog futures contract ended the week at $84.05/cwt, down $2.125 from the preceding Friday. Today, August hogs settled at $84.975/cwt, down $4.20 from last Friday. The October contract settled at $71.95, down $2.375 for the week.

After moving higher for the last six weeks, corn futures fell sharply this week. The July contract lost 53.25 cents this week to close the week at $3.845 per bushel. December corn futures ended the week at $3.9425/bushel, down 54.5 cents from last Friday.

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