Mandatory Price Reporting (MPR) data indicates that for barrows and gilts purchased in 2011 on a carcass weight basis by non-small packers, 4.2 percent were negotiated purchases, 38.4 percent were market formula contracts (formula priced from reported hog or pork prices), 9.8 percent were priced off of the futures market, 15.2 percent were other types of contracts, 4.7 percent were purchased from another packer, and 27.6 percent were raised by the packer that slaughtered them. Over the 10-year history of MPR, the biggest change has been in the number of negotiated purchases (down 10.4 percentage points) and packer owned (up 10.2 percentage points). Negotiated sales may not be a viable pricing method much longer. They have declined at slightly over one percentage point per year for the last decade.

The average retail price of pork in December was $3.461 per pound, down 5 cents from the month before, but up 27.3 cents from December 2010. Pork prices have been above a year-ago for 21 consecutive months.

The average December price for 51-52 percent lean hogs was $62.14 per cwt. That was $11.22 higher than 12 months earlier.

Calculated pork demand was up 4 percent in December and up 1.3 percent for the year, based on preliminary data.

Hog prices ended the week even with the previous Friday. The national average negotiated carcass price for direct delivered hogs on the morning report today was $82.30 per cwt., up 50 cents from last Friday. The were not enough hogs sold early today for a morning price quote in either the Western Corn Belt or Iowa-Minnesota. The Eastern Corn Belt averaged $81.05 per cwt. this morning. Friday’s top live hog price at Peoria was $59.50 per cwt. Zumbrota, Minn., had a top of $60 per cwt. The top for interior Missouri live hogs was $61.50 per cwt., up 50 cents from the previous Friday.

USDA’s Thursday afternoon calculated pork cutout value was $83.29 per cwt., down $1.48 from the previous Thursday, the lowest since Jan. 11, and second lowest in the last year. Loins, butts and hams were lower; bellies were higher. The national average hog price this morning was 98.8 percent of the pork cutout value.

Hog slaughter totaled 2.167 million head this week, down 2.4 percent from the week before and down 0.8 percent compared to the same week last year. Barrow and gilt carcass weights for the week ending Jan. 14 averaged 206 pounds, down 1 pound from both the week before and from a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 275.3 pounds, down 1.1 pounds from the previous week, but up 1.0 pound compared to a year earlier.

Today’s (Friday, Jan. 27) close for the February lean hog futures contract, $86.67 per cwt, was up $1.35 from the previous Friday. The April lean hog futures contract settled at $87.37 per cwt., up 32 cents for the week. May hogs settled at $96.17 per cwt. June hogs ended the week at $97.35 per cwt.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Ron Plain may write to him in care of this publication.