Hog Outlook: Strong December Pork Demand, Prices End Higher

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As usually happens, retail pork prices dropped in December. The average grocery store price of pork last month was $3.188 per pound, down 13.2 cents from November, but still 36.8 cents higher than 12 months earlier. The year-over-year price increase is encouraging since December pork production was up 3.6% compared to a year earlier.

The average price of pork at retail in 2010 was record high at $3.114 per pound, up 19.4 cents from 2009 and up 17.7 cents from the 2008 record. Adjusted for inflation, retail pork prices last year were the highest since 2005. The strength in the 2010 pork price was primary driven by less pork on the market. The per capita pork supply last year was only 47.8 pounds, down 2.3 pounds from 2009 and the lowest annual total since 1997.

The pork demand index started 2010 weak but ended the year on a strong note. Preliminary data imply retail pork demand was up 12% compared to the fourth quarter of 2009. For the year, retail demand was down 0.7%.

The farm-to-retail price spread was 4.8 cents lower in 2010 than in 2009. The 51-52% lean live barrow and gilt price averaged $55.07/cwt in 2010, up $13.85 from 2009 and only $1.47 below the 1996 record.

Hog prices ended this week higher compared to the week before. The national weighted average carcass price for negotiated hogs Friday morning was $74.24/cwt, up $1.52 from the previous week. The average carcass price this morning in the eastern cornbelt was $73.15/cwt. The western cornbelt averaged $75.47/cwt and Iowa-Minnesota averaged $75.62/cwt this morning. The top live hog price Friday at Sioux Falls was $53.50/cwt. The top at Zumbrota was $50 and Peoria’s top was $50/cwt. The interior Missouri live top Friday was $50.50/cwt, up from $49 the previous Friday.

USDA’s Thursday afternoon calculated pork cutout value was $85.95/cwt, up $2.16 from the previous Thursday. Hams, loins, butts and bellies were all higher.

The average carcass weight of barrows and gilts slaughtered the week ending January 8 was 207 pounds, up 1 pound from the previous week and 6 pounds heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 274.8 pounds, down 1 pound from the week before but up 4.1 pounds compared to a year earlier.

Hog slaughter totaled 2.166 million head this week, up 1.5% from the week before and down 1.7% compared to the same week last year.

The February lean hog futures contract ended the week at $80.32/cwt, up from $79.52 the previous Friday. The April contract ended the week at $86.57/cwt and June hogs settled at $97.52.

March corn futures ended the week near $6.57/bushel.

By Ron Plain, University of Missouri



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