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June USDA hog inventory report close to forecasts
 
Most of the numbers in USDA’s June hog inventory report were close to trade forecasts, except for the number of sows farrowed and the number of pigs per litter this spring.

March-May pigs per litter were a record 10.31 head, up 2.2 percent from a year ago. The trade expected up 1 percent. There were 2 percent fewer litters farrowed this spring than last. The trade expected March-May farrowings to be down 0.9 percent. These two “misses” offset each other.

The spring pig crop was up 0.1 percent which was what the trade predicted. At 30.111 million head, the spring pig crop is the largest ever. This is likely to translate into the largest fourth quarter hog slaughter ever, by my calculation up 0.3 percent from the record set last year.

USDA said the market hog inventory was down 0.1 percent on June 1. That should keep slaughter close to year-ago levels and prices in the $90 for several more weeks. Since June 1, barrow and gilt slaughter has been up 0.9 percent, the same as implied by the inventory of heavy market hogs.

Farrowing intentions for June-August are down 0.1 percent and fall farrowing intentions are up 1 percent. I expect this year’s average price for barrows and gilts to be close to $85 per cwt. of carcass. That is higher than last year, but below the 2011 record.
As of June 30, 67 percent of corn acres were rated in good or excellent condition. That is up 2 percentage points from the week before and up 19 points from a year ago. Corn prices are expected to plummet as we approach harvest. The July corn futures contract ended this week at $6.85 per bushel.

The September contract ended the week at $5.26 and December corn settled at $4.91. September soybean meal futures ended the week at $386.70 per ton. That is $102.40 lower than the July contract.

The national average negotiated carcass price for direct delivered hogs on the morning report on July 5 was $97.24 per cwt., down 5 cents from June 28. The Eastern Corn Belt averaged $97.03 per cwt. this morning. Neither the Western Corn Belt nor Iowa-Minnesota had enough early sales for a morning price quote. Peoria had a top live price this morning of $67 per cwt. The top for interior Missouri live hogs Friday was $70.50 per cwt., down $1.50 from the previous Friday.

The July 5 morning pork cutout value based on mandatory price reporting was $107.55 per cwt. FOB plants, down $3.73 from the week before, but up $16.91 from a year ago. The average hog carcass price is 90.4 percent of the calculated pork cutout value.
Hog slaughter this week totaled 1.795 million head, down 11 percent from the week before (due to the Independence Day holiday) but up 2.9 percent compared to the same week last year. The average barrow and gilt live weight in Iowa-Minnesota last week was 273.4 pounds, down 0.6 pound from a week earlier, but up 3.4 pounds from a year ago.

The July lean hog futures contract closed at $102.35 per cwt. on July 5, up $1.08 from the previous Friday. August hog futures ended the week at $97.75 per cwt., up 30 cents from the week before.

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 Ron Plain or Scott Brown may write to them in care of this publication.
7/10/2013