Hog Outlook

Ron Plain and Scott Brown
University of Missouri
February 27, 2015

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Hog prices were sharply higher this week following last Friday evening’s agreement on a new labor contract for longshoremen who work at the 23 west coast ports. A work slowdown had caused a serious backup in containers waiting for loading. This was especially problematic for perishable products waiting for export.

As expected, the latest cold storage report showed a lot more frozen meat. On January 31, there was 18.4% more pork, 10.5% more beef, and 2.5% more chicken in cold storage than the month before.

The average price of pork at retail was $3.989 per pound in January. That is down 0.2 cents from the month before, but up 23.1 cents from a year earlier. The record monthly high for pork was $4.215/lb last September. Bacon demand continues to be strong as retail bacon prices averaged $1.105 per pound above boneless pork chop prices during January.

The average live price for 51-52% lean hogs was $54.05/cwt in January. That was down $7.19 from December and down $4.31 from January 2014.

Thursday’s negotiated carcass price averaged $64.94/cwt which is $6.84 higher than a week earlier.

Because of confidentiality rules, there were no eastern corn belt or national negotiated price reports this morning. The western corn belt had a morning average negotiated carcass price of $64.72/cwt, up $5.26 from the previous Friday morning. The Iowa-Minnesota average on the morning report today was $64.77/cwt.

Peoria had a top live price today of $38/cwt, $2 higher than seven days ago. The top price Friday for interior Missouri live hogs was $48.25/cwt which is up $8.25 from the previous Friday.

Packer margins were squeezed this week as hog prices rallied and the cutout value declined. Friday morning’s pork cutout value was $69.98/cwt FOB the plants, down 86 cents from the week before and down $34.69 from a year ago. This is the sixth consecutive week with a lower cutout value. Wholesale belly prices are down 48% from a year ago.

Hog slaughter this week totaled 2.262 million head, down 0.8% from the week before, but up 5.6% from same week last year. Hog slaughter has been above the year ago level for the last six weeks. Compared to a year ago, pork production during the last six weeks was up 6.7%.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.6 pounds, down 1.2 pounds from the week before, up 2.4 pounds from a year ago, and up 8.4 pounds from two years ago. Weights have been above year ago each week since March of 2013.

Hog futures were higher this week. The April lean hog futures contract closed today at $67.47/cwt, up 7 cents for the week. May hog futures ended the week at $79.90/cwt, up $2.60 from the week before. June hogs gained $1.15 this week to close at $82.87/cwt. The July contract ended the week at $83.17/cwt.

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