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% were negotiated purchases, 38.4% were market formula contracts (formula priced from reported hog or pork prices), 9.8% were priced off of the futures market, 15.2% were other types of contracts, 4.7% were purchased from another packer, and 27.6% 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% lean hogs was $62.14/cwt. That was $11.22 higher than 12 months earlier.

Calculated pork demand was up 4% in December and up 1.3% 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/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/cwt this morning. Friday's top live hog price at Peoria was $59.50/cwt. Zumbrota, had a top of $60/cwt. The top for interior Missouri live hogs was $61.50/cwt, up 50 cents from the previous Friday.

USDA's Thursday afternoon calculated pork cutout value was $83.29/cwt, down $1.48 from the previous Thursday, the lowest since January 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% of the pork cutout value.

Hog slaughter totaled 2.167 million head this week, down 2.4% from the week before and down 0.8% compared to the same week last year. Barrow and gilt carcass weights for the week ending January 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 close for the February lean hog futures contract, $86.67/cwt, was up $1.35 from the previous Friday. The April lean hog futures contract settled at $87.37/cwt, up 32 cents for the week. May hogs settled at $96.17/cwt. June hogs ended the week at $97.35/cwt.

Source: Ron Plain