US Hog Contracts Record Price Increases in Week 6 of 2017

US - Looking back at last week, livestock futures contract prices generally increased some week-over-week, according to the Steiner Consulting Group, DLR Division, Inc.
calendar icon 14 February 2017
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Averaging of the daily closing prices put the weekly average Live Cattle (fed) CME contract at $116.99 per cwt., up $0.79 for the week but below the levels posted from mid-January through the end of that month. The futures market expects the seasonal low fed cattle prices to be associated with the August contract which averaged $101.66 per cwt., up $0.98 week-over-week.

CME’s Feeder Cattle contract for March 2017 slipped slightly for the week, averaging $123.15 per cwt. (down $0.04), remaining well below the recent high set the week ending 20 January at $130.26. That contract for the traditional end of the summer (September) and first of the fall (October) averaged $123.11 and $121.74, respectively. Both of those feeder contracts gained $1.50 or more compared to one week earlier.

All the CME’s 2017 Hog contracts recorded price increases last week, with February averaging $73.17 per cwt. and jumping-up the most (up $3.92 week-over-week). Last week, the July 2017 contract averaged $78.56 per cwt, increasing $1.00 week-overweek, while the October contract gained $1.19 per cwt. to $68.32. For hogs, every 2017 contract has risen dramatically since last October. For example, the week ending 21 October 2016 the February and October 2017 contracts averaged $48.45 per cwt. and $58.72, respectively.

Cash prices for cattle and hogs were higher last week. Cattle prices were well below 2016’s, in contrast the national base hog price was higher year-over-year ($5.85 per cwt. above 2016’s)(see weekly production and cash price summary table below). In wholesale markets, as depicted by cutout values, Choice beef declined weekover-week while pork increased. Year-over-year, the beef cutout value was down 13.0 per cent and the pork cutout was up 11.2 per cent. As shown in the table, preliminary production projections for last week by Market News showed beef up 4.9 per cent year-over-year and pork increasing 3.8 per cent.

Last Thursday’s AMS report titled Actual Slaughter Under Federal Inspection (released 9 February) provided data for the week ending 28 January showing that slaughter weights of steers and heifers continued to decline and dropped a bit more than normal during January. Dressed steer weight was down 14 pounds compared to 2016’s and heifer weight declined 9 pounds.

Wrapping-up this weekly review, we turn to the USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report , which was released Thursday, 9 February. From a general perspective the livestock and feedstuff supply numbers were in-line with the prior monthly report and market analysts did not expect significant changes in those commodities. In terms of 2017’s export tonnage forecasts, the WASDE report raised beef slightly and did not change pork.

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