More Meat Could Mean Lower Prices
USDA’s May WASDE predicted 2016 pork production will be up 2.0 percent from last year and 2017 production will be up 2.6 percent from this year. Total red meat and poultry production is expected to be up 3.1 percent this year and up 2.9 percent next year. More meat should mean lower prices. USDA is forecasting hog prices will be down $3/cwt this year with live hog prices averaging $46-48/cwt. They expect hog prices to be down another $3/cwt or so in 2017. USDA is predicting modest increases in both pork imports and exports this year.
USDA is predicting a record corn harvest of 14.43 billion bushels this fall. That would be 1.5 percent more than the 2014 record. The forecast of a record harvest is based on the most corn acres since 2013 and a predicted 168 bushels per acre, the third highest yield ever. USDA is forecasting a marketing year average corn price of $3.05 to $3.65 per bushel.
Corn planting is a bit behind last year but ahead of the 5-year average. USDA’s weekly Crop Progress report says that 64 percent of corn acres were planted by May 8. That compares to 45 percent a week earlier and 69 percent on that date last year. The five-year average is 50 percent planted by May 8.
Both cash hog prices and the pork cutout values were higher this week. Friday morning’s pork cutout value was $84.29/cwt FOB the plants. That is up $5.56 from the week before and up 73 cents from a year ago. Pork bellies have recovered from the big drop they took a week ago. This morning’s national negotiated hog price was 87.1 percent of the cutout value.
The national negotiated barrow and gilt carcass price averaged $74.22/cwt on Thursday, up $3.23 from a week earlier, but down $5.17 from a year ago. The national negotiated barrow and gilt price averaged $73.39/cwt on the morning report today, up $3.52 from a week earlier. Both the western corn belt and Iowa-Minnesota average $74.24/cwt this morning. There was no negotiated price quote this morning for the eastern corn belt.
The top hog price today at Peoria was $47/cwt, up $2 from last Friday. The top price for interior Missouri live hogs was $49.50/cwt, up 75 cents from a week ago.
This week’s hog slaughter was 2.16 million head, down 2.4 percent from last week, but up 1.6 percent from the same week last year.
The average slaughter weight of barrows and gilts in Iowa-Minnesota last week was 283.2 pounds, down 1.1 pounds from the week before, but up 2.0 pounds from a year ago.
The May hog futures contract gained 5 cents this week to close at $76.85/cwt. The June lean hog futures contract ended the week at $81.95/cwt, up 67.5 cents from the preceding Friday. Today, July hogs settled at $82.55/cwt.
The futures market is more bullish on corn prices than is USDA. The May corn futures contract settled at $3.82 per bushel today, up 6 cents from last week. July corn ended the week at $3.9075/bushel, up 13.25 cents from last Friday. December corn ended the week at $3.9825/bushel. ∆
DR. RON PLAIN AND DR. SCOTT BROWN: Agricultural Economists, University of Missouri