It looks like the U.S. Country of Origin Labeling law (COOL) may not survive legal challenges from Canada and Mexico. Sources indicate the World Trade Organization (WTO) will be issuing a ruling against COOL later this year. COOL did not appear to impact U.S. hog prices when it was implemented in the spring of 2009 and is not likely to impact them if it goes away.
Both pork cutout and cash hog prices reached record highs two weeks ago, then took big drops last week. The national average negotiated carcass price for direct delivered hogs on last Friday's report was $88.19/cwt, down $3.94 from a week earlier. The western corn belt average price was $87.12/cwt. Neither the eastern corn belt nor Iowa-Minnesota had enough volume early for a market report. Last Friday's top live hog price at Peoria was $61/cwt. Zumbrota's top was $62/cwt. The top for interior Missouri hogs was $62.25/cwt, down $2.25 from the previous Friday.
The pork cutout value took a sharp drop last week. USDA's Thursday afternoon calculated pork cutout value was $89.75/cwt, down $6.86 from the previous Thursday. Hams, loins, butts, and bellies were all lower. Last Friday's national average hog carcass price equaled 98% of the pork cutout value. That is unsustainably high. Hopefully, good meat movement over the 3-day weekend will deplete grocery store meat counters and boost cutout values this week. Otherwise, hog prices are going lower. Since very few hogs will be slaughtered on Monday, packers should find it easier to buy their planned total for the week.
Hog slaughter totaled 2.031 million head last week, up 0.5% from the week before and up 5.0% compared to the same week last year. Year-to-date hog slaughter is down 0.9%, but due to heavier weights year-to-date pork production is up 1.2%.
Barrow and gilt carcass weights for the week ending May 14 averaged 204 pounds, the same as a week earlier and 3 pounds heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 270.9 pounds, up 0.1 pounds from the week before and also up 0.1 pounds compared to the same week last year. This is the closest Iowa-Minnesota weights have been to the year-ago level since September.
The June lean hog futures contract ended last week at $88.92/cwt, down $3.05 from the previous Friday. The July contract settled Friday at $88.60/cwt, down $3.72 for the week. August hogs settled at $90.22. Five weeks ago these three contracts were all above $100/cwt.
USDA's latest crop progress report estimates 79% of the corn acres were planted by May 22, down from 92% planted on that date last year and a 5-year average of 87% planted. Only 11% of the Ohio corn crop has been planted. The July corn futures contract lost 1 cent this week to end at $7.585/bushel. September corn settled at $7.2825 and December corn ended the week at $6.84/bushel, up 18 cents from last Friday.