Hog Outlook

Ron Plain and Scott Brown
University of Missouri
July 18, 2014

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Pork cutout value set new daily record highs on Wednesday, Thursday and Friday of this week. This morning's pork cutout value was $137.87/cwt FOB the plants, up $3.20 from the week before, up $38.08 from a year ago, and up 78 cents from yesterday's record. Wholesale ham prices, $141.88/cwt, also were record high today.

Iowa State University calculations estimate the typical market hog slaughtered in June cost $56.80/cwt live to raise and earned a profit of $93.04 per head when sold. That breaks the old record profit of $92.35/head set in March. The four months with the largest profits per hog are the last four months.

Domestic meat demand was up 4.6% in May compared to a year earlier. On average, domestic demand for red meat and poultry has been up 3.0% over the last 12 months. May domestic demand for pork was up 10.1% compared to May 2013. On average pork demand over the last 12 months was up 5.6%. Export demand for U.S. pork was up 10.6% in May compared to a year ago. The average for the last 12 months is up 11.9%.

Hog prices backed down from last week's record level. The national average negotiated carcass price for direct delivered hogs on the morning report today was $127.20/cwt which is down $1.74 from last week, but up $32.98 from a year ago. The western corn belt averaged $127.09 this morning. Iowa-Minnesota averaged $126.97/cwt. There was no morning price quote today for the eastern corn belt. Peoria had a top live price today of $90/cwt. The top price for interior Missouri live hogs was $91.25/cwt which was the same as the previous Friday.

This morning's hog carcass price equaled 92.3% of the pork cutout value.

Hog slaughter totaled 1.833 million head this week. That was down 1.4% from the week before and down 8.9% from the same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 285.5 pounds. That was up 1.3 pounds from the week before and a record 13.5 pounds heavier than a year ago. It was the 9th consecutive week with weights at least 10 pounds heavier than a year ago.

Hog futures were mostly lower this week. The August hog futures contract ended the week at $127.07/cwt, down $1.60 from the previous Friday. October hogs lost 25 cents this week to close at $113.55/cwt. The December contract ended the week at $103.60/cwt down 75 cents for the week. The February lean hog contract settled at $99.27/cwt.

This week's USDA Crop Progress report said that 76% of U.S. corn acres were in good or excellent condition on July 13. That is up 1 point from the week before and 10 points higher than on the same date last year.

The September corn futures contract closed at $3.71 per bushel today which was 7 cents lower than last Friday. December corn ended the week at $3.785/bushel.

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