Hog Outlook

Ron Plain and Scott Brown
Ag Economics, MU
August 26, 2016

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The Canadian swine herd was up 1.9% at midyear. Compared to July 1, 2015 their breeding herd was up 0.7% and their market hog inventory was up 2.0%. These percent changes are well in line with the U.S. swine herd on June 1. The Canadian hog herd is only 20% of the size of the U.S. herd. Canada is the source for about three-fourths of our pork imports plus about 6 million live hog imports each year.

USDA says there were 600 million pounds of pork in cold storage at the end of July. That is up 2.3% from the month before, but down 5.3% from the same date last year. This is the most pork in cold storage for any month since May and the least for any July since 2014.

Slaughter hog prices were lower this week. The national negotiated barrow and gilt price averaged $60.06/cwt on the morning report today, down $1.81 from a week earlier, the same as two weeks ago, and down $10.99 from a year ago. There were no regional price quotes this morning for the eastern corn belt, western corn belt, or Iowa-Minnesota.

The top hog price today at Peoria was $37/cwt, unchanged from a week ago. Today's top price for interior Missouri live hogs was $44.75/cwt, down 75 cents from last Friday.

Friday morning's pork cutout value was $76.31/cwt FOB the slaughter plants. That is up $1.38 from the week before. Loin, ham and butt prices were higher, but belly prices were lower than the previous Friday. This morning's national negotiated hog price is 78.7% of the cutout value.

This week's hog slaughter totaled 2.266 million head, down 1.1% from last week, up 1.8% from the same week last year, and the third most ever for a week in August. Of the four largest slaughter weeks during August, three were this month.

Year-to-date hog slaughter is up 0.4%. Because of lighter weights, year-to-date pork production is down 0.2%.

The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 274.7 pounds. That is up 0.1 pound from the week before, but down 2.5 pounds from the same week last year.

Hog futures were slightly lower this week. The October lean hog futures contract ended the week at $61.325/cwt, down 60 cents from the preceding Friday. Today, December hogs settled at $56.625/cwt, down 82.5 cents from last Friday. The February contract settled at $60.95, down 90 cents for the week.

USDA's Crop Progress report says that 75% of corn acres were in good or excellent condition on August 21. That is up 1 point from a week earlier and 6 points higher than on that date last year.

The September corn futures contract lost 18 cents this week to close at $3.1625 per bushel. December corn futures closed 18.75 cents lower than last Friday at $3.25/bu. The March 2017 contract ended the week at $3.345 per bushel.

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