By Ron Plain
University of Missouri 

  

The University of Michigan’s July 2015 consumer confidence index released July 31 shows a decline from last month of 3.1 percent. The index in July stands at 93.1 which is its highest 8-month average since 2004. Although the index declined on a monthly basis, it is still 13.8 percent higher than a year ago and hopefully allows pork demand to continue at its current strong pace.

The release of the prices received and prices paid indexes for livestock production in the latest Agricultural Prices report delivered last week is a reminder of the squeeze that has been occurring for the livestock sector in 2015. The prices received index for livestock production reached a peak of 135 percent (2011 base) in October 2014 and has fallen by 14 points to 121 percent in June 2015 as livestock prices have fallen. The decline in the prices paid index for the livestock sector is much less with only a 1 point drop over the same period. The prices received index for hogs leads the livestock sector decline with a 38 percentage point decline over the past 12 months.

Soybean crop conditions are at 62 percent good/excellent in last week’s survey, trailing last year’s survey for the same period by 9 percent. Poorer conditions in Illinois, Indiana, Missouri and Ohio have caused this year’s conditions to lag 2014. USDA will provide its first survey-based yield estimates with the August reports set to be released Aug. 12. This could be important for soybean meal prices in the months ahead.

Cash hog prices were mixed to steady last week. Thursday’s average negotiated carcass price for plant delivered hogs was $74.57 per cwt, up 30 cents from the previous week. The national average negotiated carcass price for direct delivered hogs on the morning report July 31 was $73.27 per cwt. This was virtually unchanged from a week ago and $43.64 lower than a year ago. The Western Corn Belt price lost $0.95 per cwt. on the week to $73.63 per cwt. There was no quote for the Eastern Corn Belt. Peoria had a top price July 31 of $48 per cwt, while interior Missouri live hogs had a top of $54.25 per cwt.

The pork cutout value moved $3.72 higher for the week, with the morning’s cutout July 31 at $89.21 per cwt FOB the plants. Bellies advanced 2.9 percent last week. That value was still $38.11 lower than a year ago. The morning’s national negotiated hog price July 31 equaled 82.1 percent of the cutout value, a drop of 3.7 percent versus the previous week.

Hog slaughter for last week came in at 2.137 million head, up 14.3 percent from the same week last year. Year to date slaughter is 7.5 percent above 2014. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 277.8 pounds, a drop of 5.9 pounds from the same week last year.

The August lean hog contract ended last week at $78.53 per cwt, up $0.90 per cwt from the previous Friday. October closed at $63.70, down 37.5 cents. The December lean hog futures contract lost $1.05 per cwt to fall to $60.48 per cwt, and February hogs finished at $66.73 per cwt.

September corn closed July 31 at $3.71 per bushel, down 21 cents from last Friday. December closed at $3.81.

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 may write to him in care of this publication.