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Hog prices soar to record highs in first week of May

Are this week’s hog prices the highest ever? Because of changes in price reporting systems (and my limited data), it is difficult to say exactly when hog prices were the highest. During the week ending on June 2, 1990, the terminal market live price for barrows and gilts averaged $64.59 per cwt. The 51-52 percent lean live price averaged $63.30 per cwt. for the month of August 1996. The Mandatory Price Reporting system (MPR) daily peak was $67.80 per cwt. on a live basis and $86.83 per cwt. on a carcass basis, both on August 11, 2008. Wednesday’s national MPR average price for barrows and gilts bought on a live weight basis was $69.22 per cwt., and the average carcass price was $86.43 per cwt.

John Lawrence at Iowa State University estimates the average market hog was sold at a profit of $29.39 per head in April. That makes April the most profitable month since August 2006 and only the fourth profitable one in the last 31 months. Lawrence estimates cost of production at $50.91 per cwt. live, the lowest since December 2007.

Cash receipts from U.S. hog sales totaled $14.4 billion last year, down $1.7 billion from 2008 according to USDA/NASS. The top three states (Iowa, North Carolina and Minnesota) accounted for 55.3 percent of cash receipts. The top 10 hog states had 86.6 percent of the total cash receipts from hog sales.

USDA’s Thursday afternoon calculated pork cutout value was $90.10 per cwt., down 10 cents from the previous Thursday, but up $31.52 compared to the same day last year. Loins were higher this week, but hams and pork bellies were lower. The record high pork cutout value was $94.41 per cwt. on August 15, 2008.

The national weighted average carcass price for negotiated hogs Friday morning was $85.47 per cwt., $2.99 higher than the previous Friday. Regional average prices on Friday morning were: eastern Corn Belt $85.46, western Corn Belt $85.53, and Iowa-Minnesota $84.52 per cwt. The top live hog price Friday at Sioux Falls was $61 per cwt., down $2 from the previous Friday. Peoria topped at $58 on Friday and Zumbrota, Minn. had a top price of $60. The interior Missouri live top Friday was $61.75 per cwt., $3.75 higher than the previous Friday.

This week’s hog slaughter totaled 1.992 million head, down 1.8 percent from the week before, and down 1.2 percent compared to the same week last year. This was the first non-holiday week with slaughter below 2 million head since July.

The average carcass weight of barrows and gilts slaughtered the week ending April 24 was 202 pounds, one pound heavier than a year ago.

Iowa-Minnesota live weights last week averaged 270.5 pounds, up 0.6 pound from the week before and up 0.9 poundscompared to a year earlier. The May lean hog futures contract ended the week at $88.50 per cwt., down $1.02 from the previous Friday. The June contract settled at $85.52, down 80 cents for the week. July closed the week 20 cents lower at $86.02 per cwt. and August ended the week at $86.30 per cwt.

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.

5/13/2010