Iowa State University (ISU) calculations on hog income and expenses indicate the average hog marketed in June turned a profit of $10.92 making June the first profitable month since July 2012. 

The estimated cost of production, $72.06 per cwt., of live weight, was lower for the fifth consecutive month. During the ten month period from August 2012 through May 2013, calculations by Shane Ellis at ISU indicate an average loss of $31.08 per hog sold. Extrapolated to the U.S. hog industry, that totals to a loss of $3 billion.

Crop growing conditions continue to be far better than last year. As of July 28, 63 percent of corn acres were rated in good or excellent condition. That is unchanged from the week before, but up 39 points from a year ago.

The expectation of a big harvest is pushing down feed prices. Cash corn prices in Omaha were $5.72 per bushel at the start of August, down $1.25 from two weeks earlier. The September corn contract ended the week at $4.76 per bushel, down 16 cents from the previous Friday. December corn settled at $4.6375, off 12 cents for the week. September soybean meal futures ended the week at $385.20 per ton, down $18.80 for the week. December meal settled at $354.20 per ton.

This week’s economic news was not encouraging for domestic meat demand. The U.S. economy grew by 1.1 percent in the first quarter of 2013 and 1.7 percent in the second quarter. Growth rates above 2 percent are needed. During July, 162,000 jobs were added nationally. The long term trend in job growth is 230,000 per month.

The national average negotiated carcass price for direct delivered hogs on the morning report Friday, Aug. 2 was $93.37 per cwt., up $1.68 from last Friday. The Eastern Corn Belt averaged $91.79 per cwt., Friday morning. The Western Corn Belt and Iowa-Minnesota both had a morning average of $98.69 per cwt. Peoria, Ill., had a top live price Friday morning of $65 per cwt. Zumbrota, Minn., topped out at $67.50 per cwt. The top for interior Missouri live hogs Friday was $69 per cwt., unchanged from the previous Friday.

Friday (Aug. 2) morning’s pork cutout value based on mandatory price reporting was $103.67 per cwt., FOB plants, up $4.79 from the week before and up $10.89 from a year ago. Loin, butt and belly prices were higher this week; hams were lower. The average hog carcass price is 90.1 percent of the calculated pork cutout value.

Hog slaughter this week totaled 2.022 million head, up 1.7 percent from the week before, but down 0.9 percent compared to the same week last year. The average barrow and gilt live weight in Iowa-Minnesota last week was 270.4 pounds, down 0.7 pound from a week earlier, but up 4.9 pounds from a year ago.

The August lean hog futures contract closed at $99.25 per cwt., Friday, Aug. 2, up $1.48 from the previous Friday. October hog futures ended the week at $83.95 per cwt., down 85 cents from the week before. December hogs closed the week at $80.80 per cwt.

Hog and corn futures imply the coming 14 months will be profitable ones for the average hog producer.

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 Ron Plain or Scott Brown may write to them in care of this publication.