No surprise that record pork prices are a drag on exports

By RON PLAIN
Universityof Missouri - Columbia

There were few significant changes in this month’s USDA price forecasts (WASDE). USDA held steady its forecast for the marketing year average corn price at between $3.20 and $3.80 per bushel. They raised the midpoint of their soybean meal forecast by $10 to $360 per ton. USDA cut the prediction of the 2014 average live hog price by 38 cents to $76.22 per cwt. Their forecast for 2015 live hog prices is unchanged with an average between $63 and $68 per cwt.
Record U.S. pork prices this year are having the expected impact on international trade. Year-over-year pork exports were down 11.9 percent in October with a large decline in shipments to Japan and China. Pork imports were up 40.2 percent in October compared to 12 months earlier. The increase was largely due to more pork from Canada. In October, pork exports equaled 18.0 percent of U.S. pork production and imports equaled 5.1 percent.
During the first 10 months of 2014, pork imports are up 12.9 percent and pork exports are up 0.4 percent.
The morning pork cutout value Friday, Dec. 12, was $92.06 per cwt. FOB the plants, down 68 cents from the week before, but up $5.52 from a year ago. Loins and hams were lower. Belly prices were higher. The national average negotiated carcass price for direct delivered hogs on the morning report Dec. 12 was $80.54 per cwt., down $3.58 from the prior Friday, but up $2.93 from a year ago. The Western Corn Belt averaged $78.12 per cwt. on the Dec. 12 morning report. There were no negotiated carcass prices reported for the Eastern Corn Belt or Iowa-Minnesota.
Peoria had a top live price Dec. 12 of $58 per cwt. The top price that morning for interior Missouri live hogs was $58.50 per cwt., which was 75 cents lower than the previous Friday.
The morning hog carcass price Dec. 12 averaged 87.5 percent of the cutout value.
Hog slaughter last week totaled 2.254 million head, up 0.8 percent from the week before, but down 2.9 percent compared to the same week last year. This was the 42nd consecutive week with hog slaughter below the year-earlier level.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week, 285.4 pounds, was unchanged from a week earlier and up 3.0 pounds from a year ago. That was the 88th consecutive week with weights above the year-earlier level.
The December lean hog futures contract closed Friday, Dec. 12, at $87.52 per cwt., up 92 cents for the week. February hog futures ended the week at $83.25 per cwt., down $2.37 from the week before. April hogs lost $2.60 last week to close at $84.35 per cwt. The May contract ended the week at $89.00 per cwt. June hogs closed at $91.15 per cwt.
Corn futures were higher last week. The December contract gained 15 cents to end at $3.9625 per bushel. March corn settled at $4.075/bushel, 13 cents higher than the previous Friday. May corn futures settled at $4.155/bushel.

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.