Hog Outlook: Wholesale Pork Cutout Value Estimates to be Released

US - On 1 April, USDA-AMS will begin releasing on a timely basis their new wholesale pork cutout value estimates based on mandatory packer reporting, write Ron Plain and Scott Brown.
calendar icon 4 March 2013
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Packers have been submitting the mandatory pork price data twice daily since early January, but USDA has been publishing the numbers with a one week delay. The purpose of the delay was to make sure the new system was working properly and to allow for comparisons between the new mandatorily reported pork price data and the traditional voluntarily reported price data.

Iowa State University calculations say the typical Iowa market hog sold in January cost $74.13/cwt of live weight to raise and was sold at a loss of $25.16 per head. This was the sixth consecutive month with a record cost of production and the sixth consecutive month with red ink.

USDA's annual report on farm numbers says there were 68,300 US farms with hogs last year, which is 800 fewer than the year before. Of these farms, 8,100 did not own hogs, i.e. they were contract growers.

There were 605 million pounds of pork in cold storage at the end of January. That was up 9.7 per cent from the month before and up 3.4 per cent compared to a year earlier.

Hog prices are dropping fast. The national average negotiated carcass price for direct delivered hogs on the morning report today was $70.43/cwt, down $4.85 from last Friday and down $15.03 from three weeks earlier. Eastern corn belt hogs averaged $70.36 this morning. The western corn belt averaged $70.88. Iowa-Minnesota didn't have a morning price quote.

Peoria had a live top of $49/cwt on Friday. Zumbrota, MN didn't have enough hogs for a market test. The top for interior Missouri live hogs today was $56.50/cwt, down 50 cents from the previous Friday.

Thursday afternoon's calculated pork cutout value was $81.31/cwt, down 47 cents from the previous Thursday and down $3.55 from this week last year. Ham prices were higher than a week ago, but loins, bellies, and butts were lower. The national average hog carcass price this morning was 86.6 per cent of the cutout value. Two weeks ago, the hog carcass price was above the pork cutout value.

Hog slaughter this week totaled 2.168 million head, up 4.9 per cent from last week and up 0.7 per cent compared to the same week last year.

The average barrow and gilt live weight in Iowa-Minnesota last week was 276.2 pounds, up 0.9 pound from a week earlier and up 0.4 pound from a year ago. Last week was the first with weights above year-ago since the week ending January 12.

Friday's close for the April lean hog futures contract was $81.12/cwt, down 53 cents from the previous Friday. May hog futures ended the week 50 cents lower at $89.40/cwt. June hogs lost 42 cents this week to settle at $91.37/cwt today. July hog futures ended the week at $91.65/cwt.

Both corn futures and soybean meal futures ended the week higher than the previous Friday.

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