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Record Pork and Hog Prices

by 5m Editor
15 August 2011, at 10:40am

US - Strong export demand, light slaughter weights, and lower-than-expected hog slaughter are giving us record pork and hog prices, writes Ron Plain.

The pork cut-out value rose for the sixth consecutive week and was above $110/cwt for the first time ever on both Monday and Wednesday of this week. USDA's calculated pork cut-out value on Thursday (11 August) was $109.43/cwt, up $1.33 from the previous Thursday.

The national average negotiated carcass price for direct delivered hogs on the morning report on Friday (12 August) was $102.56/cwt, up $1.49 from last Friday. The Friday morning price report for the western corn belt was $104.98/cwt. Iowa-Minnesota also averaged $104.98/cwt. The eastern corn belt averaged $101.40/cwt. Friday’s top live hog price at Peoria was $70/cwt. Zumbrota’s top was $72/cwt. The top for interior Missouri live hogs was $73.50/cwt, up 75 cents from the previous Friday.

Hog slaughter totalled 2.034 million head this week, up 4.1 per cent from last week, but down 0.8 per cent compared to the same week last year. Barrow and gilt slaughter is running 1.3 per cent under the level implied by the June hogs and pigs report. Barrow and gilt carcass weights for the week ending 30 July averaged 196 pounds, down one pound from a week earlier and down one pound from a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 260.8 pounds, down 0.1 pound from the week before, down 6.0 pounds compared to the same week last year, and the lightest of any week since September 2008. This is the 11th consecutive week Iowa-Minnesota weights have been below the year-earlier level. Look for both slaughter weights and daily hog slaughter to increase as we move closer to fall.

Their August supply and demand report lowered USDA's forecast of the 2011 corn crop by 556 million bushels and raised their corn price estimate for the upcoming marketing year to between $6.20 and $7.20 per bushel. It looks like hog carcass prices will need to average at least $89/cwt in 2012 for the typical hog producer to turn a profit. USDA is predicting that for the first time ever, feed will not be the primary use for the US corn crop. They estimate 4.9 billion bushels of this year's corn crop will be fed to US livestock and poultry, 5.1 billion bushels will go to ethanol production, 1.75 billion bushels will be exported, and 1.41 billion bushels will go to food, seed and other usage. The feed usage is down two per cent from the previous year, down 17 per cent from four years earlier and the lowest since the 1995-96 marketing year. Less feed means less meat. USDA lowered their forecast of 2012 red meat and poultry production to 0.4 per cent less than this year. They are forecasting a 1.6 per cent increase in pork production in 2012.

Friday's close for the August lean hog futures contract, $107.45/cwt, was up 25 cents from the day before, up $2.53 from last Friday and the highest settlement price ever for any lean hog contract. On 12 August, the October lean hog contract settled at $89.47/cwt, down $2.38 from the previous Friday. The December lean hog contract settled Friday at $86.20/cwt, down $2.55 for the week. September corn futures contract gained 27 cents this week to settle at $6.93/bu. December corn futures close at $7.03, up 34 cents from the previous Friday. March settled at $7.16/bu. The August soybean meal contract ended the week at $345.20/ton.