Hog Outlook

Ron Plain and Scott Brown
University of Missouri
January 23, 2015

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For several weeks there has been a slowdown in activity at west coast seaports because of a dispute between the Pacific Maritime Association and the International Longshoreman and Warehouse Union. This is causing serious problems for U.S. meat exporters and has the potential to become a crisis. Containers of meat destined for export are piling up and growing old at west coast docks. Roughly 22% of U.S. pork production, 10% of beef and 20% of chicken are exported each month, with most going out from the west coast. The potential loss in export value is huge and is a big threat to farm prices.

This week saw big price declines in both hog and cattle futures. The February lean hog futures contract closed today at $69.30/cwt, down $5.20 for the week. April hog futures ended the week at $70.65/cwt, down $7.02 from the week before. May hogs lost $6.60 this week to close at $76.77/cwt. The June contract ended the week at $80.20/cwt.

There were 497 million pounds of pork in cold storage at the end of December. That was up 2.3% from the month before, but down 10.3% compared to a year earlier. Frozen stocks of beef and chicken were up 11% and 2% respectively. Turkey stocks were down 19%.

Commercial hog slaughter during 2014 totaled 106.8783 million head, down 4.6% compared to the year before and the smallest slaughter since 2006.

Friday morning's pork cutout value was $83.71/cwt FOB the plants, down 37 cents from the week before and down $2.82 from a year ago. Ham and belly prices were higher this week. Loin prices were lower.

There were no USDA barrow and gilt carcass prices reported for this morning because of confidentially concerns associated with low sales volume. The national average plant delivered carcass price for Thursday was $68.35/cwt. Regional carcass prices on Thursday averaged $67.94/cwt in the eastern corn belt and $69.10/cwt in both the western corn belt and Iowa-Minnesota. For the week, carcass prices were down about $2/cwt.

Peoria had a top live price today of $44/cwt. The top price Friday for interior Missouri live hogs was $49.75/cwt which is up 75 cents from the previous Friday.

Hog slaughter this week totaled 2.316 million head, up 2.6% from the week before and up 4.6% from same week last year. This was the biggest slaughter week since the week before Christmas 2013.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 287.1 pounds, down 0.9 pound from the record set the week before, but up 3.4 pounds from a year ago.

The March corn futures contract ended the week at $3.87 per bushel unchanged from the previous Friday. The May corn contract gained a penny this week to close at $3.95 per bushel. July corn settled at $4.03/bu.

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