Pork supplies are tightening and prices are moving up. Western Corn Belt cash hog carcass prices averaged $81.80 per cwt. this morning, the highest since August 2008. USDA’s Thursday afternoon calculated pork cutout value was $85.25 per cwt., up $5.94 from the previous Thursday, up $12.97 from three weeks ago, and up $23.34 compared to the same day last year. Loins, hams and pork bellies were all more than $5 higher again this week. The current pork cutout is also the highest since August 2008.

John Lawrence at Iowa State University has long maintained an estimate of hog farm profitability. His numbers indicate that the typical farrow to finish operation turned a profit in March of $8.84 per head. This was the first profitable month since August 2008. John estimates current breakeven at between $51 per cwt. and $52 per cwt. of live weight. Over the last two and half years, hog producers have lost more than $6 billion.

Both export demand and live hog demand are up, but domestic retail pork demand remains below year-ago levels. The average retail price of pork in March was $2.914 per pound, down 0.3 cents from February and 2.8 cents lower than in March 2009. March live hog prices averaged $52.43 per cwt., up $3.45 from February and up $9.96 from March 2009. Margins for middlemen are being squeezed. The March farm-to-retail price spread for pork was the tightest since August 2008. Either retail pork prices move higher, or hog prices will be forced back down. Meat supplies are tight, so retail pork prices should move up. The question is whether the economy is strong enough to sustain higher grocery store prices.

The national weighted average carcass price for negotiated hogs Friday morning was $79.96 per cwt., $6.27 higher than the previous Friday. Regional average prices on Friday morning were: eastern Corn Belt $76.72, western Corn Belt and Iowa-Minnesota both $81.80 per cwt. The top hog price Friday at Sioux Falls was $55 per cwt., up $2 from the previous Friday. Peoria and Zumbrota, Minn. both had a top price of $52 on Friday. The interior Missouri live top Friday was $52.75 per cwt., $0.75 higher than the previous Friday.
This week’s hog slaughter totaled 2.032 million head, up 0.7 percent from the week before, but down 4.3 percent compared to the same week last year. Year-to-date pork production is down 5 percent.

Following nine weeks of being lower, the average carcass weight of barrows and gilts slaughtered the week ending April 3, 201 pounds, was unchanged from the same week of 2009. Iowa-Minnesota live weights last week averaged 270.2 pounds, up 0.3 pounds compared to a year earlier.

The May lean hog futures contract ended the week at $86.42 per cwt., up $2.55 from the previous Friday. The June contract settled at $86.15, up $1.78 for the week. July closed the week $1.63 higher at $86.20 per cwt. and August ended the week $86.25 per cwt. The May to August price range is unusually flat. May corn futures gained 18.25 cents this week and settled at $3.64 on Friday. The July contract ended the week at $3.74, up 16.75 cents per bushel from the previous Friday.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Glenn Grimes or Ron Plain may write to them in care of this publication.