Hog Outlook
Glenn Grimes & Ron Plain
University of Missouri - Columbia

The average retail price of pork in grocery stores during July was $3.185 per pound. The good news is that this was the third consecutive month with record high retail pork prices. The bad news is the calculated domestic demand for pork during July was nearly 4 percent below year-ago levels.

How can prices be record high and demand be down? Two reasons – in calculating demand we use the deflated price of pork. Adjusted for inflation, July retail pork prices were not even in the top 100 months.

We also account for the quantity purchased. The record nominal pork prices are being accompanied by what appears to be the lowest daily per capita pork purchases in the past decade.

Given the state of the U.S. economy, it should not be surprising that pork demand is soft. Pork and hog prices are up because the supply is down. The swine herd is likely to start expanding next year. The U.S. economy had better grow, too; otherwise, hog and pork prices might just drop as fast as they have risen.

USDA’s Thursday afternoon calculated pork cutout value was $94.36 per cwt., up $4.58 from the previous Thursday and only 5 cents below the all-time record high set Aug. 15, 2008. Loins, butts, hams and bellies were all higher. Bellies averaged $1.4268 per pound, higher than any date prior to Aug. 3, 2010.

Higher cutout prices usually mean higher hog prices. The national weighted average carcass price for negotiated hogs Friday morning was $80.64 per cwt., $4.93 higher than the previous Friday. Regional average prices on Friday morning were: eastern Corn Belt $78.74, western Corn Belt $81.41 and Iowa-Minnesota $81.40 per cwt.

The top live hog price Friday was $60 per cwt. at Sioux Falls, $54 at Peoria and $55.50 at Zumbrota. The interior Missouri live top Friday was $55.75 per cwt., 75 cents higher than the previous Friday.

Last week’s hog slaughter totaled 2.073 million head, up 0.8 percent from the week before, but down 7.2 percent compared to slaughter during the same week last year. This was the highest weekly slaughter since the week ending on April 3.

The annual low in daily hog slaughter usually occurs in June or July. Do not be surprised if slaughter is above two million hogs during each non-holiday week for the rest of the year.

As usually happens at this time of year, slaughter weights are declining. The average carcass weight of barrows and gilts slaughtered the week ending Aug. 7 was 197 pounds, the same as the week before but one pound lighter than a year earlier. Iowa-Minnesota live weight two weeks ago averaged 265.6 pounds, down 1.2 pounds compared to a week earlier and 1.5 pounds lighter than the same week last year.

The October lean hog futures contract ended the week at $77.20 per cwt., up $2.55 from the previous Friday. The December contract settled at $74.07 for the week. February closed the week at $76.72 per cwt.

The September CBOT corn contract ended the week at $4.21-1/4 per bushel, up 10 cents from the last week.

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.