By RON PLAIN
Hog Outlook
Pork demand continues to remain at high enough levels to allow most hog producers to remain profitable despite much larger supplies this year. The farrow-finish profitability series maintained at Iowa State University pointed to September as the sixth consecutive month above breakeven, and the 19th out of the last 21. Though hog prices are down sharply from a year ago, so are input costs. Profitability levels will be challenged as we move into 2016 and the domestic meat supply continues to increase.
The retail pork price posted its fourth consecutive monthly increase in September, reaching $3.92 per pound. This is up 22 cents since June but still remains 30 cents a pound below the September 2014 average. Bacon prices continue to grow at the retail level, with the series from the Bureau of Labor Statistics having increased 79 cents per pound since May to $5.73 per pound. Boneless pork chops remain near the middle of the $4.20 to $4.60 per pound range that has existed for the past 18 months.
USDA’s Foreign Agricultural Service released its biannual livestock world markets and trade circular on Oct. 9. Despite sharply lower hog inventory noted in China after months of liquidation, annual pork production is projected to remain very near the 2014 level in both 2015 and 2016 because of heavier slaughter weights. The U.S. industry will continue to monitor closely any developments in China, where more than half of the world’s pork is produced and consumed.
Cash hog prices were down slightly last week. The average negotiated carcass price Thursday, Oct. 15, for plant-delivered hogs was $69.80 per cwt., down $0.90 from the previous week. The national average negotiated carcass price for direct delivered hogs on the morning report Oct. 16 was $68.78 per cwt., down $1.04 for the week, and $29.40 lower than a year ago. The Western Corn Belt price dropped $1.30 per cwt. to $68.84 per cwt. Iowa-Minnesota hogs sold at $68.97 per cwt. on Friday morning, and there was no quote for the Eastern Corn Belt. Peoria had a top price Oct. 16 of $49 per cwt., with interior Missouri live hogs at $48.25 per cwt., both unchanged from the previous week.
The pork cutout gained a little ground last week, with the morning cutout value Oct. 16 at $89.24 per cwt. FOB the plants, up 90 cents. Hams and butts declined on the week, with other parts of the cutout increasing in value, led by loins advancing 4.0 percent. The morning national negotiated hog price Friday, Oct. 16, equaled just 77.1 percent of the cutout value, down 2.0 percent from the previous week’s level.
Hog slaughter for last week was 2.318 million head, up 1.2 percent from the previous week and 6.1 percent higher than the same week last year. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 281.1 pounds, 0.8 pounds higher than the week before but 3.4 pounds below a year ago.
The December lean hog contract fell 66 cents for the week to end at $65.47 per cwt. February hogs lost 60 cents, closing at $68.35.
December corn closed Oct. 16 at $3.77 per bushel, down 14 cents from the previous Friday.
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.
