Hog Outlook: 2016 Pork Production Estimate Lowered

US - USDA has slightly lowered their estimate of 2016 pork production to 24.97 billion pounds. That is down 0.2 per cent from their previous estimate, but up 1.9 per cent from 2015's production. They expect 2016 market hog prices to average somewhere around $47/cwt of live weight, which would be $3 lower than last year, write Ron Plain and Scott Brown, Ag Economics, MU.
calendar icon 18 April 2016
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After 10 years as the world's top pork exporter, last year the US slipped to number two behind the European Union. We exported 2.241 million metric tons last year; the EU exported 2.388 million tons of pork. In 2015 the US was the fifth largest pork importer after Japan, China, Mexico and South Korea.

Calculations by Lee Schulz at Iowa State University indicate that the typical Iowa market hog sold during March earned a profit of $3.66, making March the second profitable month this year. Dr. Schulz's calculated breakeven price was $45.30/cwt (live) or $60.40/cwt of carcass. Cost of production for March hogs was the lowest since December.

Cash hog prices were steady this week, as they have been most weeks for the last two months. The national negotiated barrow and gilt carcass price averaged $62.16/cwt on Thursday, up 34 cents from a week ago and up 2 cents from a year ago. The national negotiated barrow and gilt price averaged $60.50/cwt on the morning report today. The western corn belt averaged $59.28/cwt and Iowa-Minnesota averaged $60.34/cwt this morning. There was no regional negotiated price quote this morning for the eastern corn belt.

The top hog price today at Peoria was $38/cwt, down $2 from last Friday. The top price for interior Missouri live hogs was $42.75/cwt, unchanged from a week ago.

Friday morning's pork cutout value was $78.22/cwt FOB the plants. That is up $1.21 from the week before and up $11.59 from a year ago. Loin and ham prices were higher this week; bellies lower. This morning's national negotiated hog price was 77.3 per cent of the cutout value.

This week's hog slaughter was 2.197 million head, up 2.0 per cent from last week, but down 1.9 per cent from the same week last year.

The average live weight of barrows and gilts at slaughter in Iowa-Minnesota last week was 284.4 pounds, up 0.2 pound from the week before and up 0.6 pound from a year ago.

Year-to-date, hog slaughter is down 0.9 per cent. Because of lighter slaughter weights, pork production is down 1.6 per cent thus far in 2016.

The April hog futures contract expired yesterday at $66.80/cwt. May hogs lost $2.325 this week to close at $74.40/cwt today. The June lean hog futures contract ended the week at $77.625/cwt, down $3.25 from the preceding week. Today, July hogs settled at $78.10/cwt.

The May corn futures contract settled at $3.785 per bushel today. That is up 16.25 cents from last week. July corn ended the week at $3.82/bu., up 17 cents from last Friday.

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