Cutout took another big drop the last week of August. USDA's Thursday afternoon (Sept. 1) calculated pork cutout value was $95.35/cwt, down $6.76 from the previous Thursday and down $14.08 from 3 weeks ago. Loins, butts, hams, and bellies were all lower.
Heavier weights and increased daily slaughter are pushing hog prices down fast. The national average negotiated carcass price for direct delivered hogs on the morning report today was $82.64/cwt, down a whopping $12.26 from last Friday and $19.92 lower than three weeks earlier. The Friday morning price reports for the western corn belt and for Iowa-Minnesota both averaged $82.98/cwt. The eastern corn belt barrows and gilts averaged $82.56/cwt of carcass. Friday's top live hog price at Peoria was $54.50/cwt. Zumbrota's top was $60/cwt. The top for interior Missouri live hogs was $62.25/cwt, down $7.50 from the previous Friday.
Hog slaughter totaled 2.219 million head this week, up 0.7% from last week and up 0.4% compared to the same week last year. Barrow and gilt carcass weights for the week ending August 20 averaged 196 pounds, up 1 pound from a week earlier but down 1 pound from a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 263.5 pounds, up 1 pound from the week before, but down 2.1 pounds compared to the same week last year. This is the fourteenth consecutive week Iowa-Minnesota weights have been below the year-earlier level. Year-to-date, hog slaughter is down 0.6% while pork production is up 0.7%.
Through mid August, year-to-date sow slaughter was up 0.2%. But, a 13% decline in the number of Canadian sow imported for slaughter means that the slaughter of U.S. sows is up 3.1% for the year and up 5.5% in the last month. This is encouraging since a rise in sow slaughter often means a smaller breeding herd. However, that may not be the case this time. Sow prices have been quite strong lately. In recent days, the per-live-pound price of 500 pound sows has been at or above the per-live-pound price for barrows and gilts. The uptick in sow slaughter may be driven by the profit to be had from replacing big sows with gilts.
Friday's close for the October lean hog futures contract, $85.80/cwt, was down $1.30 from last Friday. Today the December lean hog contract settled at $83.10/cwt, down $1.48 from the previous Friday. The February lean hog contract settled Friday at $87.25/cwt, down 63 cents for the week.
Corn prices went up and down and ended close to where they started. The September corn futures contract ended the week at $7.50/bu, down 2 cents from the previous Friday. December corn settled at $7.60 today, down 7 cents for the week. The March contracted settled at $7.72/bu.
The U.S. economy added no jobs during August. The number of Americans grows by about 217,000 per month. If you figure 45-50% of the population should hold a job, then we need to add at least 100,000 jobs per month just to keep up with population growth. The economy is weak and that will impact on meat demand.