By RON PLAIN
Hog Outlook
Total red meat and chicken production in the U.S. is running very near the record pace of 2008 for the first 20 weeks of 2015. This is 3.75 percent above last year. This total meat production growth is occurring despite the fact that beef output is down 3.7 percent year to date, as pork production has grown by 6.8 percent and chicken by 7.9 percent. High growth rates for pork and chicken production are expected to continue for the remainder of the year.
With higher volumes of meat moving through markets, demand strength becomes critical in maintaining prices at profitable levels. On the international front, U.S. dollar strength continues to constrain exports. The trade-weighted dollar index against major currencies has grown again recently, and though it remains below the levels of March and early April, it is still at a higher level than any other time since 2003. Monthly meat export data through April will be released this week.
The monthly USDA Ag Prices report indicated that the April U.S. corn price was 3.75 per bushel. Corn prices have remained in a fairly narrow band in recent months, and with most of this year’s crop being planted in a timely manner in much of the country (although Missouri, Nebraska, Kansas, Colorado and Texas trail their recent 5-year average planting rate), attention will now turn to yield prospects as we move through summer. The hog-corn price ratio was reported at 13.1, identical to the average from 2010-14.
Last week was mostly up for cash hog prices. The average negotiated carcass price for plant delivered hogs Thursday, May 28, was $79.54 per cwt., up $1.33 against the previous week. The national average negotiated carcass price for direct delivered hogs on the morning report May 29 was $77.48 per cwt. This was $1.00 per cwt. higher than a week earlier, but $28.91 lower than a year ago. The morning price quote May 29 for the Eastern Corn Belt was $77.17 per cwt., with the Western Corn Belt at $79.79 per cwt. and Iowa-Minnesota at $79.64. Peoria had a top price May 29 of $55 per cwt., while interior Missouri live hogs had a top of $55.75 per cwt.
The pork cutout value advanced last week, with Friday morning’s cutout at $86.08 per cwt. FOB the plants, up $1.08 from the previous Friday, mainly on the strength of higher belly values. The value May 29 was $28.11 lower than a year ago.
Hog slaughter for last week’s holiday-shortened week totaled 1.856 million head, up 6.5 percent from the same week last year. Year to date slaughter is 5.7 percent above 2014. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 280.4 pounds, down 0.4 pounds from the week before and 6.3 pounds lower than the same week last year.
The June lean hog contract ended the week at $83.97 per cwt., up 25 cents from the previous Friday. July closed at $83.47, down 25 cents. The August lean hog futures contract lost $1.12 to $82.60 per cwt., and October hogs finished at $72.77 per cwt.
July corn closed May 29 at $3.515, down 8.5 cents from the previous Friday.
The views and opinions expressed in this column are those of the authors and not necessarily those of Farm World. Readers with questions or comments for Ron Plain may write to him in care of this publication.
