Last week the President finally sent the free trade agreements with Panama, Colombia and South Korea to Congress for approval. The Colombian agreement was signed in November 2006. The agreement with Panama was signed in June 2007. USDA estimates that once approved, increased trade with these three countries will add $2.31 billion to U.S. ag exports. The U.S. Meat Export Federation predicts the South Korean agreement will double the value of U.S. pork going to South Korea.
Last year, the U.S. shipped 220.171 million pounds of pork to South Korea, 21.765 million pounds to Colombia, and 11.639 million pounds to Panama. Combined, these three countries accounted for 6% of U.S. pork exports.
Korea’s tariff on U.S. pork and beef will be phased out over several years.
Hog slaughter totaled 2.34 million head this week, up 4.0% from last week and up 4.4% compared to the same week last year. This is the largest weekly hog slaughter since December and one of the top 25 largest weeks ever. Barrow and gilt carcass weights for the week ending September 24 averaged 200 pounds, up 1 pound from the week before and unchanged from a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 270.5 pounds, up 0.5 pound from the week before, but down 0.2 pounds compared to the same week last year.
Despite the large slaughter, hog prices moved higher this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $90.85/cwt, up $3.51 from last Friday. The Friday morning price report for the western corn belt was $90.79/cwt. Iowa-Minnesota, at $93.19, was significantly higher than the western corn belt. Eastern corn belt barrows and gilts averaged $90.90/cwt of carcass. Friday’s top live hog price at Peoria was $63/cwt. Zumbrota’s top was also $63/cwt. The top for interior Missouri live hogs was $64.50/cwt, up 75 cents from the previous Friday. It appears that large amounts of pork are being exported.
This week the pork cutout value dropped slightly from the previous week. USDA’s Thursday afternoon calculated pork cutout value was $97.91/cwt, down 17 cents from the previous Thursday. Loins, hams and butts were lower, bellies higher.
Today’s close for the October lean hog futures contract, $94.67/cwt, was up $1.30 from last Friday. The December lean hog futures contract settled at $89.40/cwt, up $1.60 from the previous Friday. February gained 18 cents this week to settle at $91.75/cwt.
After two weeks of sharp losses, corn futures posted a modest gain this week. The December futures contract settled at $6.00, up 8 cents for the week. March corn settled at $6.1275, May at $6.2025 and July at $6.2425 per bushel.