Ron Plain and Scott Brown
Ag Economics, MU
February 5, 2016
Weather was a big factor in this week's hog trade as a winter snowstorm in the Midwest caused several slaughter plants to stop operations for a day. Hog prices were higher despite idle slaughter plants and weakness in both the cutout value and the futures market.
Part of the shortfall in slaughter will be made up on Saturday when USDA expects 200 thousand hogs to be processed. This week's hog slaughter was 2.182 million head, down 6.3% from last week and down 3.4% from the same week last year.
It appears the closed PM Beef slaughter plant in Windom, Minnesota will be reopened as a hog slaughter facility. Glen Taylor, who owns the NBA's Minnesota Timberwolves, and a partner plan to invest $20-25 million to remodel the old cattle plant to slaughter 4,000 hogs per day. To be called Prime Pork, the business will focus on selling high quality pork products, mostly to restaurants.
Hog prices are higher for the fifth consecutive week. The national negotiated barrow and gilt price on the morning report today averaged $60.26/cwt, up 70 cents from last Friday morning. There were no negotiated price quotes this morning for the eastern corn belt, western corn belt or Iowa-Minnesota.
The top price today at Peoria was $38/cwt, up $1 from last Friday. The top price for interior Missouri live hogs today was $42.75/cwt, up $3.75 from a week ago.
Friday morning's pork cutout value was $76.86/cwt FOB the plants. That is down 53 cents from the week before, but up $2.49 from a year ago. Loin, ham and belly prices were each lower this week. This morning's national negotiated hog price was 78.4% of the cutout value.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.1 pounds, down 0.5 pound from the week before and down 2.3 pounds from a year ago. Iowa-Minnesota slaughter weights have been below the year-ago level for 44 of the last 45 weeks.
The February hog futures contract ended the week at $64.80/cwt, down $1.00 from the week before. April hogs lost 40 cents this week to close at $70.30/cwt. The June lean hog futures contract ended the week at $80.425/cwt, down 23 cents from the preceding week.
The March corn futures contracted settled at $3.66 per bushel today. That is down 6 cents from last Friday.
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