Hog Outlook

Ron Plain and Scott Brown
University of Missouri
May 22, 2015

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The World Trade Organization has ruled against the U.S. Country of Origin Labeling (COOL) law for the fourth time. The ruling is in regard to how COOL works for meat from imported cattle and hogs. The next step is for the WTO to determine the amount of sanctions that Canada and Mexico will be allowed to place on U.S. products going into those two countries. Sanctions are likely to go into effect late this year, unless Congress changes the law before then.

The average price of pork at retail during April was $3.769 per pound. That was 10.5 cents lower than the month before, 18.1 cents lower than a year ago, and lower for the seventh consecutive month.

Calculations by Lee Schulz at Iowa State University estimate the average cost of production for hogs marketed in April at $49.03/cwt live or $65.37/cwt carcass. This left a profit for Iowa farrow-to-finish operations of $2.84 per head. That is the first profit after two months of red ink.

After seven weeks of higher prices, hog prices were mostly lower this week. Thursday's average negotiated carcass price for plant delivered hogs was $78.21/cwt which is $1.18 lower than a week earlier.

The national average negotiated barrow and gilt purchase price on the morning report today was $76.48/cwt, down $3.57 from a week ago. The western corn belt averaged $75.52/cwt and Iowa Minnesota had a morning average of $77.56/cwt. There was no eastern corn belt negotiated price quote this morning.

Peoria had a top live price today of $55/cwt, $1 higher than last Friday. The top price today for interior Missouri live hogs was $55.75/cwt, up 75 cents the previous Friday.

This morning's pork cutout value was $85.00/cwt FOB the plants. That is up $1.44 from the week before, but down $29.66 from a year ago. This morning's negotiated average hog price was 90.0% of the cutout value.

Hog slaughter this week totaled 2.147 million head, up 0.9% from the week before and up 9.3% from same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 280.8 pounds, down 0.4 pound from the week before and down 6.7 pounds from a year ago. This was the eighth consecutive week with weights lighter than last year.

The June lean hog futures contract closed today at $83.85/cwt, up 50 cents for the week. July hog futures ended the week at $84.10/cwt, up 18 cents for the week. August hogs lost 2 cents to close at $84.00/cwt. The October contract settled at $74.25/cwt.

USDA estimates that 85% of corn acres were planted by May 17. That is 10 points higher than a week earlier and 14 points higher than on the same date last year.

The July corn futures contract settled at $3.605/bushel today, down 5 cents from a week ago.

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