The July supply and demand report released Thursday, July 11 by USDA continues to point to a large corn crop this fall.
Current estimates call for nearly 14 billion bushels of corn, a record amount of production that is 6.6 percent larger than the next highest harvest from 2009.
Should this materialize and 2013/14 corn prices fall into the $4.40-5.20 per bushel range as projected by USDA, pork producer profits could flip from the sharp losses posted the last couple of years to moderate profitability beginning this fall.
The number of new porcine epidemic diarrhea virus (PEDv) cases has dropped recently. While it is still unclear whether the cases already reported will have a noticeable effect on herd productivity this year, it appears that hopefully this disease outbreak has almost run its course.
Pork export data for the first five months of 2013 shows all shipments down nearly 13 percent versus year ago, though results are mixed for our major pork markets.
Our largest two international consumers in recent years, Japan and Mexico, have both reduced purchases 5-6 percent from 2012, though May exports were up vs. year ago to both these destinations. Shipments to Canada are up a little thus far in 2013, but China and Russia have substantially cut purchases of U.S. pork, accounting for 78 percent of the total year to date decline.
The pork cutout value on Friday morning (July 12) was $103 per cwt., FOB plants, losing $4.55 from a week ago Friday, July 12.
Though bellies were up for the week, all of the other primal cuts were lower, with ribs and butts down double-digit percentages on the week.
The national average negotiated carcass price for direct delivered hogs on the morning report July 12 was $95.51 per cwt., down $1.73 from last Friday. Hogs in the Eastern Corn Belt were at $95.32 per cwt., with the Western Corn Belt hogs at $97.78 and Iowa-Minnesota prices ended the week at $97.80 per cwt. Peoria, Ill., had a top live price Friday (July 12) morning of $65 per cwt. The top for interior Missouri live hogs Friday, July 12 was $72 per cwt., up $1.50 from the previous Friday. The average hog carcass price was 92.7 percent of the cutout value.
Hog slaughter this week totaled 2.038 million head, up 13.9 percent from last week (which included the Independence Day holiday) and up 4 percent compared to the same week last year. Year to date hog slaughter is virtually even with 2012.
The average barrow and gilt live weight in Iowa-Minnesota last week was 272.9 pounds, down 0.4 pounds from a week earlier but up 3.9 pounds from a year ago.
The July lean hog futures contract closed at $102.15 per cwt., today, down $0.20 per cwt., from the previous Friday. August hog futures ended the week at $95.125 per cwt., down $2.625 from the week before.
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 or Scott Brown may write to them in care of this publication.