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PED deaths pushed ’14 pork price to uncompetitive levels

 

By RON PLAIN
Hog Outlook 

The cost of living declined in December for the third consecutive month. The drop is largely due to lower energy prices.

Retail pork prices averaged $3.991 per pound in grocery stores during December. That was down 7.3 cents from November, but up 23 cents from December 2013. December retail pork prices were the lowest since April.

The average live price for 51-52 percent lean hogs was $61.24 per cwt. in December. That was down $2.52 from the month before and the lowest month since January.

Year-over-year domestic meat demand was up 7.3 percent in November. That was the 10th consecutive positive month. Domestic pork demand was up 7.1 percent in November. However, export demand for pork was down nearly 20 percent in November. It appears that high death loss from the PED virus pushed 2014 U.S. pork prices to levels that were not very competitive on the world market.

USDA’s January WASDE publication increased the forecast of 2015 pork production by 1.2 percent and reduced the 2015 barrow and gilt price estimate by $3 per cwt. They are now predicting 4.6 percent higher pork production this year than in 2014 with market hog prices averaging in the lower $60s live compared to an average live price of $76.03 per cwt. in 2014. Currently, USDA expects 2015 pork production to exceed beef production by 65 million pounds. The last time the nation produced more pork than beef was 1952.

The Friday morning pork cutout value Jan. 16 was $84.08 per cwt. FOB the plants, up 85 cents from the week before, but down $2.41 from a year ago. Ham and loin prices were higher this week. Belly prices were lower.

The national average negotiated carcass price for direct delivered hogs on the morning report Jan. 16 was $70.27 per cwt., down $5.68 from a year ago. The Western Corn Belt and Iowa-Minnesota both averaged $70.27 per cwt. on the Jan. 16 morning report. There was no negotiated carcass price reported that day for the Eastern Corn Belt, but mathematically, it had to be close to $70.27 per cwt.

Peoria had a top live price Jan. 16 of $47 per cwt. The top price Friday for interior Missouri live hogs was $49 per cwt., which is down $3 from the previous Friday.

Hog slaughter last week totaled 2.276 million head, up 6.4 percent from the week before and up 0.6 percent from same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota set a new record last week at 288.0 pounds, up 0.3 pounds from the old record set just the week before and up 5.4 pounds from a year ago.

The February lean hog futures contract closed Jan. 16 at $74.50 per cwt., down $4.52 for the week. April hog futures ended the week at $77.67 per cwt., down $2.38 from the week before. May hogs lost $1.93 last week to close at $83.37 per cwt. The June contract ended the week at $86.65 per cwt.

The March corn futures contract lost 13 cents last week to end at $3.87 per bushel. July corn settled at $4.01 per bushel.

 

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

1/21/2015