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Good week for hog prices but more declines in exports

 

Domestic meat demand has been strong in recent months, but export demand is weak. Domestic pork demand was up 13 percent in March. March was the 27th consecutive month with demand stronger than a year earlier. Export demand for U.S. pork was down 26 percent in March.

U.S. pork exports were down 8.9 percent in March with big declines in shipments to China and Japan. This was the ninth consecutive month with export tonnage lower than a year ago. U.S. pork imports were up 28.6 percent in March. This was the 13th consecutive month with imports above the year-earlier level. During March, 20.85 percent of U.S. pork production was exported and imports equaled 4.81 percent of production.

Hog imports from Canada were up 7.4 percent in March with the increase coming from more slaughter hogs rather than feeder pigs.

Last week was another good week for hog prices. Thursday’s negotiated carcass price (May 7) for plant delivered hogs averaged $77.51 per cwt., which is $4.55 higher than a week earlier.

Peoria had a top live price May 7 of $52 per cwt., $4 higher than the previous Friday. The top price for interior Missouri live hogs was $54.25 per cwt., up $6 from the previous Friday.

The national average negotiated barrow and gilt purchase price on the morning report May 8 was $76.39 per cwt. The Western Corn Belt averaged $77.98 per cwt., and Iowa-Minnesota had a morning average of $77.00 per cwt. There was no Eastern Corn Belt negotiated price quote on the morning of May 8.

The morning pork cutout value Friday, May 8, was $79.05 per cwt. FOB the plants. That is up $5.13 from the week before, but down $33.30 from a year ago. For the fifth week in a row, wholesale belly prices were lower than the pork cutout value.

Packer margins improved some last week but are still unsustainably tight. Thursday’s national negotiated hog price May 8 equaled 96.6 percent of the cutout value. Look for packers to continue to cut back on their slaughter hours.

Hog slaughter last week totaled 2.111 million head, down 2.2 percent from the week before, but up 5.2 percent from the same week last year. Year-to-date hog slaughter is up 5.5 percent and pork production is up 5.6 percent. Since March 1, slaughter has averaged a bit over 1 percent above the level implied by the March inventory survey.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 282.0 pounds, up 0.2 pound from the week before, but down 5.0 pounds from a year ago. That was the sixth consecutive week with weights lighter than last year.

The May lean hog futures contract closed Friday (May 8) at $80.85 per cwt., up $4.85 for the week. June hog futures ended the week at $84.82 per cwt., up $3.57 from the week before. July hogs gained $1.87 last week to close at $83.92 per cwt. The August contract settled at $84.22 per cwt.

USDA estimates that 55 percent of corn acres had been planted by May 3. That is 36 points ahead of last week, 27 points ahead of last year, and 17 points ahead of the five-year average.

The May corn futures contract settled at $3.585/bushel Friday, May 8.

 

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 may write to him in care of this publication.

5/13/2015