Insight: Ron Plain’s hog report
Pork trade continues to be a positive for hog prices. Pork exports during February were 7.2% higher than 12 months earlier and pork imports were 7.2% lower. The big growth markets for pork exports were South Korea, China, Russia and Japan. During the first two months of 2011, the U.S. exported 20.6% of our pork production while pork imports equaled only 3.4% of production. A stronger world economy and a weakening dollar are two causes of these trade gains. Compared to a year earlier, the trade-weighted value of the dollar was down 4.6% in February.
The year-over-year inflation rate for March was 2.7%, the highest since December 2009. A rising inflation rate could lead to higher interest rates and slower economic growth. That would not be good for meat demand.
Hog prices ended the week slightly below last week’s record levels. The national weighted average carcass price for negotiated hogs Friday morning was $91.41/cwt, down 74 cents from the record set the previous week. The eastern corn belt averaged $91.32/cwt. The western corn belt averaged $91.52/cwt and Iowa-Minnesota had a $91.59 average price on the morning report. The top live hog price Friday at both Peoria and Zumbrota was $64/cwt. The interior Missouri live top Friday was $64.50/cwt, up 75 cents from the previous Friday.
USDA’s Thursday afternoon calculated pork cutout value was $96.00/cwt, up $1.72 from the previous Thursday with loins and hams higher. Prices for bellies and butts were lower this week. This morning’s average hog carcass price was 95.2% of the pork cutout value. That is lower than the week before but high enough to put downward pressure on hog prices.
The live hog price continues to be high relative to the carcass price. On Thursday the average negotiated barrow and gilt purchase on a live weight basis was $74.60/cwt which was 81.8% of the day’s average carcass price of $91.16/cwt.
Hog slaughter totaled 2.028 million head this week, down 2.0% from the week before, but up 0.5% compared to the same week last year.
The average carcass weight of barrows and gilts slaughtered the week ending April 2 was 206 pounds, unchanged from the previous week and 5 pounds heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 273.3 pounds, down 0.4 pounds from the week before and up 3.1 pounds compared to a year earlier. This was the 30th consecutive week above year-earlier. Although year-to-date hog slaughter is down, pork production is up 1.0% thus far in 2011.
The April lean hog futures contract ended the week at $102.42/cwt, up $1.45 from the previous Friday. The June contract ended the week at $101.07/cwt. July hogs settled at $101.12.
The May corn futures contract lost 26 cents this week to end at $7.42/bushel on Friday. September corn ended the week at $7.015.