Hog Outlook: USDA's Hogs and Pigs report and PEDv

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Most of the attention to USDA's Hogs and Pigs reports is focused on their quarterly numbers. They also publish monthly estimates as part of the quarterly reports. Perhaps the most import number in the December 27 report was their estimate of 10.04 pigs per litter (ppl) in November. It was down from 10.16 ppl in November 2012 and was the first month that ppl was below the year ago level since August 2003. The number of PED virus cases increased with the approach of winter and is widely believed to be the cause for the reduced ppl in November. Lean hog futures contracts for next summer are trading close to $100/cwt. The optimism is dependent on ppl staying below year-ago through the winter months.

Iowa State University has issued its hog costs and returns estimate for November. After five profitable months, they say the typical Iowa market hog slaughtered in November was sold at a loss of $4.07. They estimate the cost of production at $64.78/cwt of live weight. Cost of production was $74.13/cwt for hogs marketed in January and has declined each month since.

Friday morning's pork cutout value based on mandatory price reporting was $83.01/cwt FOB plants, down 82 cents from the week before and down 9 cents from a year ago. Wholesale belly prices are particularly weak in recent days, averaging less than a 20% premium to loins for the first time since June 2012.

Hog prices were mostly steady to $1 higher this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $76.27/cwt, up 95 cents from last Friday, but down $6.77 from a year ago. The eastern corn belt carcass price averaged $76.28/cwt this morning. The western corn belt averaged $76.27 and Iowa Minnesota averaged $76.25/cwt. Peoria had a live price top this morning of $53/cwt. Zumbrota, MN topped at $54/cwt. The top price for interior Missouri live hogs Friday was $55/cwt, down 75 cents from last Friday. This morning's hog prices averaged 91.9% of the cutout value.

Hog slaughter this week totaled 2.011 million head, up 9.1% from the week before and up 2.0% compared to the same week last year. The average live weight of barrows and gilts in Iowa-Minnesota last week was 282.3 pounds, up 1.7 pounds from a week earlier and up 6.5 pounds from a year ago. The annual average Iowa-Minnesota live weight at slaughter in 2013 was 275.8 pounds which is the fifth consecutive yearly record. Weights in 2013 averaged 2.7 pounds above the record set in 2012, 4.7 pounds above the 2011 record, 5.2 pounds above the 2010 record, and 7.3 pounds above the 2009 record.

The February lean hog futures contract settled at $86.67/cwt today, up $1.02 from the previous Friday. April hog futures ended the week at $91.57/cwt, up 60 cents from the week before. May hogs gained 20 cents to close at $98.70. The June contract ended the week at $101.00/cwt. July closed at $99.75/cwt.

March corn futures ended the week at $4.235 per bushel, down 4 cents from the week before.



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