2012 production costs $3 more than 2011 record

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Iowa State University calculations estimate the average Iowa market hog sent to slaughter during October cost a record $73.29 per hundred pounds of live weight to raise and was sold at a loss of $31.16 per head. This was the third consecutive monthly record high for cost of production. Cost of production this year is expected to average a bit over $68/cwt, $3 dollars above the 2011 record. Thus far in 2012, the average hog has sold at a loss of $8 per head. When the year is over, losses are expected to average between $11 and $12 per head, making this the worst year financially since 2009.

There were 606 million pounds of pork in cold storage at the end of October. That was down 4 percent from the month before, but up 24 percent compared to a year ago. Increased stocks of frozen pork often correlate with increased pork exports.

Retail pork demand was up 3.0 percent in September, but export demand was down 11.6 percent. Live hog demand was down 0.8 percent.

This was a very good week for hog and pork prices. The Thursday afternoon calculated pork cutout value was $84.19/cwt, up $2.27 from the previous Thursday. Loin prices were a bit lower, but hams, bellies and butts were higher for the week.

The national average negotiated carcass price for direct delivered hogs on the morning report today was $80.76/cwt, up $8.69 from last Friday. The eastern corn belt was $8.50 higher than last Friday at $80.44/cwt. The western corn belt and Iowa-Minnesota prices both increased by more than $6.75 to $81.84/cwt this morning. Peoria had a top live price this morning of $54 and Zumbrota had a live top today of $56/cwt. The top for interior Missouri live hogs Friday was $57.25/cwt. The average hog carcass price is 95.9 percent of the cutout value, which is unusually high for this time of year.

Hog slaughter this week totaled 2.399 million head, up 16.1 percent from the week before (which was low because of the Thanksgiving holiday) and up 1.5 percent compared to the same week last year. Year-to-date hog slaughter is 1.9 percent above 2011. USDA's September hog inventory survey implies December and January barrow and gilt slaughter will be down 1 percent from 12 months earlier.

The average barrow and gilt live weight in Iowa-Minnesota last week was 274.4 pounds, 0.5 pounds above a week earlier, but down 1.6 pounds from a year ago. This was ninth consecutive week with weights under the year-ago level.

Friday's close for the December lean hog futures contract was $84.07/cwt, up $1.60 from the previous Friday. February hog futures ended the week 45 cents lower at $86.92/cwt. April hogs settled at $91.77/cwt; June at $101.52/cwt.



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