Ron Plain and Scott Brown
University of Missouri
October 17, 2014
Calculations by Lee Schulz at Iowa State University indicate the typical market hog sold in September earned a profit of $66.15 per head. September was both the sixth highest profit month this year and the sixth highest profit month of record in this ISU data series that began in 1965.
Dr. Schulz's estimate of cost of production for hogs marketed in September is $53.47/cwt of live weight or $71.29/cwt of carcass weight. This is the lowest cost of production since October 2010.
USDA's October crop report predicted that this year's corn and soybean harvests will both be the largest of record. The corn harvest is estimated at 14.475 billion bushels, up 550 million bushels from the previous record set in 2013. The soybean crop is a record 3.927 billion bushels. The old record was 3.359 billion bushels harvested in 2009. U.S. corn prices dropped below $4 per bushel in August for the first time since August 2010. USDA is predicting the marketing year farm price of corn will average $3.40/bushel. That is down $1.06 from the year before and down $3.49 from two years ago.
Hog prices were lower this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $98.18/cwt, down $4.40 from last week. The eastern corn belt averaged $98.21 this morning and the western corn belt averaged $98.09/cwt. There was no morning price quote today for Iowa-Minnesota. Peoria had a top live price today of $73/cwt and interior Missouri's live top today was $72/cwt which is $3.00 lower than last Friday.
The pork cutout value was sharply lower this week. This morning's cutout was $112.76/cwt FOB the plants, down $10.72 from last Friday, but $19.89 higher than a year ago. Loins, butts, hams and bellies were all lower this week. Pork packer margins shrank this week but remain good. This morning's hog carcass price was 87.1% of the cutout value.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.5 pounds, down 0.3 pound from the week before but 7.5 pounds heavier than the same week last year. This is the closest weights have been to year-ago since Mid March.
This week's hog slaughter totaled 2.18 million head, up 2.1% from the week before, but down 4.8% from the same week last year. This was the biggest weekly slaughter since the week ending on January 25.
It was a turbulent week in both the stock market and the futures market, driven by concerns of slowing economic growth around the world. The December hog contract ended the week at $90.57/cwt, down $3.83 from the previous Friday. February hogs lost $3.67 this week to close at $87.55/cwt. The April lean hog futures contract settled at $87.50/cwt, a loss of $4.00 from the previous Friday. May hogs ended at $88.50/cwt.
December corn gained 14 cents this week to close at $3.48.
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