March Inventory Survey: Fewer Hogs Than Expected

US - USDA production reports were the dominant force in the markets this week, write Ron Plain and Glenn Grimes.
calendar icon 3 April 2010
clock icon 4 minute read

USDA's March inventory survey found fewer hogs than the trade was expecting causing a nice jump in this week's hog futures prices. USDA said the 1 March breeding herd was down 3.9 per cent and the market herd was down 2.7 per cent compared to a year ago. Spring farrowings are forecast to be down 4.0 per cent and summer farrowings down 2.4 per cent.

Lean hog futures responded with a limit up move on Monday and ended the week strongly higher. The April lean hog futures contract ended the week on Thursday (a day early because of the Good Friday holiday) at $74.12/cwt, up $4.45 from the previous Friday. The May contract settled at $81.72, up $5.17 for the week. June closed the week $5.35 higher at $83.37/cwt and July ended the week up $6.07 at $84.42/cwt.

USDA's 31 March planting intentions report was a bit bearish for crop prices. USDA is forecasting that US farmers will plant 88.8 million acres of corn, 2.7 per cent more than last year. Soybean acres are forecast to be up 0.8 per cent at 78.1 million acres. Wheat is the big acreage loser with plantings expected to be down 9.0 per cent to 53.8 million acres. For soybeans, this is the most acres ever; for corn, the most since 2007 and the second most since 1946; and for wheat, the fewest acres since 1971.

May corn futures lost 11.75 cents this week and settled at $3.445 on Thursday. The September contract ended the week at $3.66, down 1.25 cents per bushel from the previous Friday. May soybean meal ended the week at $265.90, down $5 compared to a week earlier.

Cash hog prices stopped a 3 week decline and closed the week strongly higher. The national weighted average carcass price for negotiated hogs Friday morning was $71.37/cwt, $6.86 higher than the previous Friday. Regional average prices on Friday morning were: eastern corn belt $69.63, western corn belt and Iowa-Minnesota both $71.68/cwt. The top hog price Friday at Sioux Falls was $51/cwt, up $4.50 from the previous Friday. Zumbrota, MN had a top price of $46 on Friday and Peoria topped at $47/cwt. The interior Missouri live top Friday was $48.25/cwt, $1.50 higher than the previous Friday.

USDA's Thursday afternoon calculated pork cutout value was $74.14/cwt, up $1.86 from the previous Thursday, and up $18.01 compared to the same day last year. Loins, hams and pork bellies were all higher this week.

This week's hog slaughter totaled 2.179 million head, down 0.4 per cent from the week before, but up 0.7 per cent compared to the same week last year. Hog slaughter has been above year-ago for 2 of the last 3 weeks. Year to date pork production is down 4.9 per cent.

The average carcass weight of barrows and gilts slaughtered the week ending 20 March was 201 pounds, unchanged from the week before and down 1 pound from the same week last year. Iowa-Minnesota live weights last week averaged 270 pounds, up 0.5 pounds compared to a year earlier.

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