Given current feed costs, last week’s hog prices were too low to cover the average producer’s cost of production, according to Ron Plain, University of Missouri agricultural economist. The futures market implies red ink for the rest of 2010.
“The national weighted average carcass price for negotiated hogs Friday morning was $58.06 per hundredweight, down $4.41 per hundredweight from the previous Friday,” says Plain. Regional average prices on Friday morning were: eastern corn belt $58.21 per hundredweight, western corn belt and Iowa-Minnesota both $57.91. The top live hog price Friday at Sioux Falls was $45.50 per hundredweight.
"The amount of pork in cold storage at the end of September was up 9.6 percent compared to the month before but down 19.5 percent compared to Sept. 30, 2009,” adds Plain. “Stocks increased by 37.2 million pounds during September which was 14.4 million pounds more than is typical for that month.”
“Cutout values were still quite high during September, so it is a bit surprising to see an above average amount of pork going into frozen stocks,” says Plain. USDA’s Thursday afternoon calculated pork cutout value was $73.75 per hundredweight, down $3.01 from the previous Thursday. Loins, butts, hams and bellies were all lower. The pork cutout is ending October $12 per hundredweight lower than it started the month.
Hog slaughter totaled 2.311 million head last week, down 1.5 percent from the week before but up 0.7 percent compared to the same week last year. Last week and (the prior) week are the only weeks so far this year with slaughter above 2.3 million hogs.
The average carcass weight of barrows and gilts slaughtered the week ending Oct. 16 was 203 pounds, up 1 pound from the week before and 3 pounds heavier than a year ago.
The December lean hog futures contract ended last week at $66.28 per hundredweight, down $4.37 from the previous Friday. The February contract ended the week at $71.92 per hundredweight and April settled at $75.95. December corn futures ended the week at $5.82 per bushel, up 22 cents from the previous Friday. Both the May and July corn contracts ended the week above $6.00 per bushel.
Source: Ron Plain, University of Missouri