Hog Outlook: January Another Month in the Red for Hog Producers

US - January was the third consecutive month with red ink for hog producers. Calculations by Lee Schulz at Iowa State University put the average loss at $12.83 per Iowa hog marketed, wrote Ron Plain and Scott Brown, University of Missouri, on Friday.
calendar icon 23 February 2016
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Dr Schulz estimated cost of production for market hogs sold in January at $45.67/cwt live or $60.89/cwt of carcass. That is $4.16 less than a year ago, but the highest cost for any month since October.

The average price of pork at retail during January was $3.793 per pound, the lowest since July. January grocery store prices averaged 5.3 cents lower than in December and 19.6 cents lower than in January 2015.

The marketing margin for middlemen shrank to $3.089 per retail pound during January. That was the lowest since October.

The average price for 51-52 per cent lean hogs during January, $40.34/cwt, was up $1.04 from the month before, but down $13.71 compared to 12 months earlier.

The consumer price index for January was higher than the month before for the first month since July. Falling energy prices have held down the cost of living, but that impact may be nearing an end.

Today's hog prices are higher for the seventh consecutive Friday. The national negotiated barrow and gilt price on the morning report today averaged $62.22/cwt, up $1.16 from last Friday morning. Both Iowa-Minnesota and the western corn belt averaged $63.83/cwt this morning. There was no negotiated price quote this morning for the eastern corn belt.

The top price today at Peoria was $40/cwt, up $1 from last Friday. The top price for interior Missouri live hogs today was $43.50/cwt, up 75 cents from a week ago.

Friday morning's pork cutout value was $74.47/cwt FOB the plants. That is down $1.43 from the week before, but up $3.63 from a year ago. Loin and ham prices were lower this week, but pork belly prices were a bit higher.

This morning's national negotiated hog price was 83.6 per cent of the cutout value.

This week's hog slaughter was 2.294 million head, up 0.6 per cent from last week and up 0.9 per cent from the same week last year.

The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 283.4 pounds, down 0.1 pound from the week before and down 2.4 pounds from a year ago. Iowa-Minnesota slaughter weights have been below the year-ago level for 46 of the last 47 weeks.

The April hog futures contract ended the week at $68.90/cwt, down $1.47 from the week before. May hogs lost $1.03 this week to close at $75.25/cwt. The June lean hog futures contract ended the week at $79.15/cwt, down $1.20 from the preceding week. July hogs closed at $7.10/cwt.

The March corn futures contract settled at $3.655 per bushel today. That is up 6.75 cents from last Friday.

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