By RON PLAIN
Hog Outlook
Iowa State University calculations estimate the average hog marketed in February sold for $3.12 per head less than the cost of production. February was the first month with red ink since December 2013. Lee Schulz estimates the average breakeven price in February at $49.81 per cwt. live or $66.42 per cwt. of carcass.
Domestic pork demand was up 14.9 percent in February, but foreign demand for U.S. pork was down 23.1 percent. U.S. pork demand has been above the year-ago level for each of the last 25 months. Export demand for U.S. pork has been down for six months in a row. I would say the strong dollar and the labor problems at West Coast docks were the main causes of the weak export demand.
Through the first 10 full weeks of 2015, year-over-year pork production was up 6.1 percent, but the pork cutout value was down 12.2 percent and hog prices were down 19.6 percent. This is a greater price decline than expected given the supply increase and likely reflects the weak export demand.
During the same 10 weeks, hog slaughter was up 5.2 percent, but sow slaughter, adjusted for increased sow imports from Canada, was up only 1.7 percent. That would seem to imply rapid breeding herd growth, but our gilt slaughter data shows a higher percent of gilts in the barrow-gilt slaughter mix. The other important factor is just how much of the slaughter increase is due to lower death loss.
The Friday morning pork cutout value March 20 was $67.52 per cwt. FOB the plants. That is down 22 cents from the week before and down $63.52 from a year ago. This is the ninth consecutive week with a lower cutout value.
The negotiated carcass price for plant delivered hogs Thursday, March 19, averaged $57.89 per cwt., which is $2.75 lower than a week earlier and $64.71 lower than a year ago.
Because of low sales volume and confidentiality rules, there were no national or regional negotiated hog carcass price reports the morning of March 20.
Peoria had a top live price of $37 per cwt., $3 lower than seven days earlier. The top price Friday, March 20, for interior Missouri live hogs was $42.25 per cwt., which was down $3.50 from the previous Friday.
Hog slaughter last week totaled 2.237 million head, up 0.4 percent from the week before and up 9.8 percent from same week last year. Hog slaughter has been above the year ago level for the last nine weeks.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.0 pounds, down 0.2 pound from the week before, but up 1.0 pounds from a year ago.
Hog futures were sharply lower again last week. The April lean hog futures contract closed March 20 at $58.45 per cwt., down $3.65 for the week. May hog futures ended the week at $68.27 per cwt., down $3.15 from the week before. June hogs lost $1.57 last week to close at $73.85 per cwt.
The May corn futures contract ended the week at $3.85 per bushel, up 11 cents for the 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.
