May 29, 2015

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 next week.

The monthly USDA Ag Prices report indicated that the April U.S. corn price was 3.75/bu. 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 (though 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.

It was a mostly up week for cash hog prices. Thursday's average negotiated carcass price for plant delivered hogs was $79.54/cwt, up $1.33 against last week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $77.48/cwt. This was $1.00/cwt higher than a week ago, but $28.91 lower than a year ago. The morning price quote today for the eastern corn belt was $77.17/cwt, with the western corn belt at $79.79/cwt and Iowa-Minnesota at $79.64. Peoria had a top price today of $55/cwt, while interior Missouri live hogs had a top of $55.75/cwt.

The pork cutout value advanced on the week, with this morning's cutout at $86.08/cwt FOB the plants, up $1.08 from last Friday mainly on the strength of higher belly values. Today's value was $28.11 lower than a year ago.

Hog slaughter for this 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/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/cwt, and October hogs finished at $72.77/cwt.

July corn closed today at $3.515, down 8.5 cents from last Friday.