Hog Outlook: Futures rally on expected slaughter reductions

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Hog futures staged a big rally this week, apparently on expectations of reduced slaughter due to the PED virus. The December lean hog futures contract settled at $90.42/cwt today, up $2.47 from the previous Friday. February hog futures ended the week at $92.72/cwt, up $2.67 from the week before. April hogs gained $3.95 to close at $93.80. June settled at $99.85/cwt.

Researchers at the College of Veterinary Medicine at Virginia Tech University announced that the three strains of the PEDV found in the U.S. are closely related to the PED virus found in Anhui Province China. There is still no conclusion on how the virus came to the U.S.

Testing data from the National Animal Health Laboratory Network says that as of October 13, the PED virus has been confirmed in 828 swine premises in 18 states. This is an increase of 59 locations from the week before and is the biggest weekly increase in the number of positive cases. During the last four weeks, 46 percent of the samples testing positive have been in North Carolina. North Carolina was the 14th state to break with the disease, but currently has the third highest number of PED cases after Iowa and Oklahoma. There is an unknown amount of double counting in this data.

Hog slaughter this week totaled 2.262 million head, down 1.5 percent from the week before and down 4.5 percent compared to the same week last year. This was the tenth consecutive week with slaughter below the year-ago level and the fourteenth consecutive week with hog slaughter lower than expected based on the September hogs and pigs report.

USDA AMS says the average carcass price for hogs during the September 30-October 17 shutdown period was $90.80/cwt.

Due to confidentiality rules, there was no morning price quotes reported for plant delivered barrows and gilts today. Today's USDA prior day report said the national average negotiated carcass price for direct delivered barrows and gilts on Thursday was $86.59/cwt. The eastern corn belt averaged $87.02/cwt on Thursday and the western corn belt averaged $85.85/cwt. The Iowa-Minnesota negotiated average price on Thursday was $85.87/cwt.

Peoria had a live price top this morning of $59/cwt. Zumbrota, MN topped out at $60/cwt. The top price for interior Missouri live hogs Friday was $62.25/cwt, unchanged from the previous Friday.

The average barrow and gilt live weight in Iowa-Minnesota last week was 277.1 pounds, up 0.1 pound from a week earlier, up 5.4 pounds from a year ago, and the seventh highest weight ever for this series.

Friday morning's pork cutout value based on mandatory price reporting was $94.74/cwt FOB plants, up $1.87 from the week before and up $9.07 from a year ago. Loin, belly, ham and butt prices were all higher this week.



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