By RON PLAIN
Hog Outlook
Hog prices stabilized last week, as the national average negotiated carcass price for direct delivered hogs on the morning report Nov. 7 was $83.34 per cwt. Though there was no quote for the previous Friday, last week’s level was only down $0.34 per cwt. from a week ago Thursday and $1.33 higher than a year ago. There were no morning price quotes Friday, Nov. 7, for the Eastern Corn Belt, the Western Corn Belt or for Iowa-Minnesota. Peoria had a top price Nov. 7 of $58 per cwt., while interior Missouri live hogs had a top of $60.75 per cwt.
The pork cutout value fell again last week, as the belly price decline of 15.7 percent more than outweighed smaller gains in picnics, ribs and hams. The Friday morning cutout Nov. 7 was $93.86 per cwt. FOB the plants, down $3.07 from the previous Friday, and now $0.41 lower than a year ago. Nov. 7 was the first Friday below year-ago levels since Jan. 31. Friday’s hog carcass price was 88.8 percent of the cutout value, up from 85.5 percent the previous week.
Pork exports may be losing a little steam given high pork prices in recent months and a stronger U.S. dollar. Monthly trade data for September released the last week of October showed a sixth consecutive monthly decline, with September 2014 exports 13.2 percent below last year’s level. Reduced trade to Asia is accounting for most of the decrease, as exports to Mexico continue to grow. Total beef plus pork net exports in September were at the lowest level since August 2010. Because of high shipment volume earlier in the year, total pork exports for the first nine months of the year still lead the first nine months of 2013 by 1.8 percent.
Domestic demand for meat, particularly for pork, continues to be strong. The 12-month moving average for pork retail demand has posted nearly 5 percent growth or better for all of 2014, with the recently available September reading the highest yet this year. Beef retail demand has also shown improved growth in recent months. Broiler-type chicks placed data released in late October continue to point to a strong chicken production increase in 2015, and pork production is set to post a healthy jump next year as well (assuming less negative effect from the porcine epidemic diarrhea virus), so strong demand will be necessary to avoid sharp declines in hog prices.
Last week’s hog slaughter totaled 2.232 million head, up 1.8 percent from the week before but down 2.4 percent from the same week last year. This year’s year-to-date slaughter is 5.2 percent below 2013. However, higher slaughter weights continue to compensate for fewer animals coming to market. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 285.2 pounds, up 0.4 pounds from the week before and 5.5 pounds heavier than the same week last year.
The December hog contract ended the week at $88.77 per cwt., up 75 cents from the previous Friday. February closed at $88.42, up 37 cents. The April lean hog futures contract gained 95 cents to $90.10 per cwt., and May hogs advanced 35 cents to $90.75 per cwt.
December corn closed Friday, Nov. 7, at $3.675, down 9.25 cents from the previous Friday. Despite some large daily movements, December soybean meal futures finished at $390.40 per ton, up just $1.40 from the previous week.
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 and Scott Brown may write to them in care of this publication.
