Hog Outlook: Bacon Demand Continues to be Strong

US - The average price of retail pork in April was $3.799 per pound. That was 3.9 cents higher than in March and 3.0 cents higher than April 2015. Bacon demand continues to be strong, write Ron Plain and Scott Brown, Ag Economics, MU.
calendar icon 23 May 2016
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The average price of bacon in grocery stores was $5.613/pound, up 11.9 cents compared to March, up 40.2 cents compared to April 2015, and the highest monthly average price since January. April retail boneless pork chop prices were the lowest since March 2014. Boneless ham prices in April were the lowest since May 2013.

After six months of decline, live hog demand was up 1.5% in April. Inflation adjusted hog prices were 5.1% higher than in April 2015 with only a 0.1% decline in daily hog slaughter.

Calculations by Lee Schulz at Iowa State University put the average profit for Iowa hogs sold in April at $9.33 per head. April was the third consecutive profitable month. Cost of production for April marketings was estimated to be $45.11/cwt live or $60.15/cwt carcass. This was the lowest cost of production since December.

USDA's weekly Crop Progress report says that 75% of corn acres were planted by May 15. That compares to 64% a week earlier and 82% on that date last year. The five-year average is 70% planted by May 15.

The national negotiated barrow and gilt carcass price averaged $75.04/cwt on Thursday, up 82 cents from a week earlier, but down $3.17 from a year ago.

The national negotiated barrow and gilt price averaged $74.30/cwt on the morning report today, up 91 cents from a week earlier. There was no regional negotiated price quotes this morning for the eastern corn belt, western corn belt, or Iowa-Minnesota.

The top hog price today at Peoria was $47/cwt, unchanged from last Friday. The top price for interior Missouri live hogs was $51.75/cwt, up $2.25 from a week ago.

Friday morning's pork cutout value was $83.11/cwt FOB the plants. That is down $1.18 from the week before and down $1.89 from a year ago. This morning's national negotiated hog price was 89.4% of the cutout value.

This week's hog slaughter was 2.119 million head, down 1.9% from last week and down 1.0% from the same week last year.

The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 283.3 pounds, up 0.1 pound from the week before and up 2.5 pounds from a year ago.

The June lean hog futures contract ended the week at $79.85/cwt, down $2.10 from the preceding Friday. Today, July hogs settled at $80.25/cwt, down $2.30 from last Friday. The August contract settled at $79.75.

July corn ended the week at $3.945/bushel, up 3.75 cents from last Friday. December corn ended the week at $3.975/bushel, up 1.5 cents for the week.

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