Hog Outlook
Ron Plain and Scott Brown
Ag Economics, MU
November 13, 2015
USDA's November World Agricultural Supply and Demand Estimates predicted that U.S. meat production would be up 2.9% in 2016 with pork up 1.7%, beef up 4.8%, broilers up 1.9% and turkey up 7.9%. More meat is likely to mean lower prices. USDA expects hog prices to average $1-$4 lower next year than this.
This was another down week for hog prices. The average negotiated price for barrows and gilts purchased on Thursday for slaughter plant delivery was $51.33/cwt, down $3.14 from a week earlier and down $17.93 from three weeks ago.
The national average negotiated carcass price on the morning report today was $50.69/cwt, down $2.67 from a week earlier. Neither the western corn belt, nor Iowa-Minnesota, nor the eastern corn belt had a morning negotiated price quote today.
Peoria had a top live price today of $30/cwt, down $6 from last Friday. The top price today for interior Missouri live hogs was $33/cwt, down $5.50 from the previous Friday.
This morning's pork cutout value was $73.04/cwt FOB the plants. That is down $3.03 from the week before.
Hog prices continue to be very weak compared to the cutout value. This morning's national average hog carcass price was only 69.4% of the pork cutout value.
This week's hog slaughter totaled 2.388 million head, up 1.2% from last week and up 7.5% from the same week last year. This was the largest hog slaughter for any week since the week ending on December 1, 2012.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 284.3 pounds, up 1.6 pounds from a week earlier, but down 1.4 pounds from a year ago. This was the 33rd consecutive week with weights lighter than a year ago.
Hog futures were lower this week. The December lean hog futures contract settled today at $54.80/cwt, down 20 cents for the week. February hog futures ended the week at $57.05/cwt, down $1.25 from the week before. April hogs lost $1.63 this week to close at $62.225/cwt. The June contract settled at $73.15/cwt.
USDA raised their estimate of corn yield by 1.3 bushels to 169.3 bushels per acre. That is the second highest corn yield ever behind last year's 171 bushels per acre. Corn production is expected to total 13.654 billion bushels, the third highest ever after 2014 and 2013. USDA is predicting the seasonal average corn price will average close to $3.65 per bushel, down 5 cents from the year before.
The December corn futures contracted settled at $3.5825 per bushel today. That is down 14.75 cents from last Friday.
USDA increased their estimated soybean yield by 1.1 bushels to a record 48.3 bushels per acre. They estimate this year's harvest at a record 3.981 billion bushels. Both records break the 2014 records. USDA expects the marketing year average price for soybeans to average close to $8.90 per bushel, down $1.20 from the year before. They expect soybean meal to average between $300 and $340 per ton.