Hog Outlook
Ron Plain and Scott Brown
University of Missouri
December 5, 2014
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It has been a good year for pork demand. The latest jobs report is encouraging. The U.S. economy added 321,000 jobs in November. That more people are working is good news for meat demand. The unemployment rate held steady at 5.8% during November.
Gasoline prices have fallen rapidly in recent weeks. That should free-up consumer dollars, some of which will be spent on food.
This is turning out to be a better than expected year for pork packers. Often years with low hog slaughter are difficult ones for packers as they bid away their profits chasing the scarce supply of hogs. It looks like 2014 packer margins will average higher than last year, despite a 4% decline in hog slaughter.
Packer margins improved this week with a higher pork cutout value and lower hog prices. Pork packer margins are usually the best during the fourth quarter.
Friday morning's pork cutout value was $92.74/cwt FOB the plants, up $1.06 from the week before and up $5.26 from a year ago. Loins and hams were higher. Belly prices were lower. Ham prices usually take a big drop in mid December.
The national average negotiated carcass price for direct delivered hogs on the morning report today was $84.12/cwt, down 63 cents from last Friday, but up $5.66 from a year ago. There was no reported negotiated price this morning for the eastern corn belt. Both Iowa-Minnesota and the western corn belt averaged $84.71/cwt on today's morning report.
Peoria had a top live price today of $59/cwt. The top price Friday for interior Missouri live hogs was $59.25/cwt which was the same as the previous Friday.
This morning's hog carcass price averaged 90.7% of the cutout value.
Hog slaughter this week totaled 2.236 million head, up 12.3% from Thanksgiving week, but down 3.5% compared to the same week last year. This was the 41st consecutive week with hog slaughter below the year-earlier level. During the last three months, hog slaughter has been slightly lower than implied by the September Hogs and Pigs report.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week, 285.4 pounds, was up 0.4 pound from a week earlier and up 3.7 pounds from a year ago. That was the 87th consecutive week with weights above the year-earlier level.
The December lean hog futures contract closed at $86.60/cwt, down $3.72 for the week. February hog futures ended the week at $85.62/cwt, down $2.60 from the week before. April hogs lost $4.65 this week to close at $86.95/cwt. The May contract ended the week at $89.75/cwt. June hogs closed at $92.80/cwt.
Corn futures were higher this week. The December contract gained 6 cents this week to end at $3.815 per bushel. March corn settled at $3.95/bu, also 6 cents higher than the previous Friday. May corn futures settled at $4.035/bu.
Sorce: AgEBB
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