Hog Slaughter Dips After 10-Week Rise
The stock market has had a wild couple of weeks. In the six days ending on Tuesday August 25, the Dow Jones Industrial Average lost 1,878 points (10.7 percent). On Wednesday and Thursday it gained back 988 points (6.3 percent). The turmoil is related to concerns about the Chinese economy.
On Thursday the Commerce Department said the U.S. economy grew at an annual rate of 3.7 percent during the second quarter. This better-than-expected news helped boost the stock market. This follows a dismal 0.6 percent growth rate in the first quarter. Meat demand usually correlates with economic growth.
The spot price for West Texas Intermediate crude oil in Cushing, OK dropped below $40 per barrel for the first few days this week. That is the lowest price since February 2009. Low energy prices are usually positive for economic growth.
There was a lot of meat in cold storage at the end of July. Frozen red meat and poultry totaled 2.403 billion pounds on July 31, up 2.5 percent from the month before and up 16.7 percent from a year ago. Pork in cold storage on July 31 totaled 635 million pounds, up 0.1 percent from the month before and up 19.1 percent from a year ago. July was the sixth consecutive month with pork stocks above the year-ago level.
The national negotiated barrow and gilt price on the morning report today was $71.05/cwt, down $1.84 from last Friday morning. The western corn belt averaged $70.34/cwt this morning, down 77 cents for the week. The eastern corn belt morning average was $71.23, down $1.98 for the week. There was no negotiated price quote this morning for Iowa-Minnesota.
Peoria had a top live price today of $47/cwt, down $1 from last Friday. The top price today for interior Missouri live hogs was $50.50/cwt, down $2.25 from the previous Friday.
This morning’s pork cutout value was $85.27/cwt FOB the plants. That is down $2.09 from the week before. Packer margins continue to be good for this time of year. This morning’s national negotiated hog price was only 83.3 percent of the cutout value.
This week’s hog slaughter totaled 2.214 million head, down 0.5 percent from last week, but up 11.4 percent from the same week last year. Hog slaughter has been up by more than 10 percent in all but one of the last 13 weeks.
The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 277.2 pounds, up 1.7 pounds from a week earlier, but down 4.9 pounds from a year ago. This was the 22nd consecutive week with weights lighter than last year.
The October lean hog futures contract settled today at $66.425/cwt, up $1.675 for the week. December hog futures ended the week at $62.05/cwt, up 75 cents from the week before. February hogs gained 2.5 cents this week to close at $66.175/cwt.
USDA says that 69 percent of corn acres were in good or excellent condition as of August 23. That is the same as the week before but 4 points lower than a year ago. Corn futures lost 2 cents this week with the September contract closing at $3.6325/bushel. ∆
DR. RON PLAIN AND DR. SCOTT BROWN: Agricultural Economists, University of Missouri