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Hog Outlook

Ron Plain and Scott Brown
Ag Economics, MU
November 20, 2015

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The average price of pork at retail during October was $3.973 per pound. That is 5.4 cents higher than the month before, but 17.6 cents lower than in October 2014. The October average pork price in grocery stores was the highest since January.

The average price for 51-52% lean hogs during October was $52.68/cwt live. That was $1.04 higher than in September, but $22.56 lower than in October 2014.

Calculations by Lee Schulz at Iowa State University estimate the average cost of production for barrows and gilts sold during October at $61.70/cwt of carcass ($46.27/cwt live). Dr. Schulz's calculations give the lowest breakeven hog price since March 2007. He estimated profit at $13.97 per hog marketed in October, making it the seventh consecutive profitable month for Iowa farrow to finish operations.

Thursday's national negotiated carcass price for hogs to be delivered to the slaughter plant was $49.63/cwt, down $1.70 from a week earlier.

The national negotiated barrow and gilt price on the morning report today was $48.06/cwt, down $2.63 from last Friday morning. Both the western corn belt and Iowa-Minnesota averaged $50.11/cwt this morning. There was no negotiated price quote this morning for the eastern corn belt.

Peoria had a top live price today of $30/cwt, unchanged from last Friday. The top price today for interior Missouri live hogs was $31.50/cwt, down $1.50 from the previous Friday.

This morning's pork cutout value was $74.00/cwt FOB the plants. That is up 96 cents from the week before with loins, hams and bellies all higher. This morning's national negotiated hog price is a miniscule 64.9% of the cutout value.

This week's hog slaughter totaled 2.4 million head, up 0.5% from last week and up 7.0% from the same week last year. This is the largest weekly hog slaughter since the week ending on September 22, 2012.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 283.7 pounds, down 0.6 pound from a week earlier and down 1.0 pound from a year ago. This was the 34th consecutive week with weights lighter than last year.

Year-to-date hog slaughter is up 7.9%, but because of lighter slaughter weights, year-to-date pork production is up only 7.1%.

The December lean hog futures contract settled today at $57.45/cwt, up $2.65 for the week. February hog futures ended the week at $58.32/cwt, up $1.27 from the week before. April hogs gained $1.30 this week to close at $63.525/cwt.

The December corn futures contract settled at $3.6325 per bushel today. That is up 5 cents from last Friday. The March corn contract closed at $3.6975/bu. today.

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