Pork Stocks Lowest Since January 2012
USDA’s September hogs and pigs report will be released later this afternoon. Trade experts are of two minds on the report. Some expect the market herd to be slightly larger than last September. Others believe the PED virus has pulled the number down to nearly 3 percent below last year. All agree the breeding herd is larger than last September and growing.
The acquisition of Smithfield Foods by the Chinese firm Shuanghui cleared U.S. government approval last week and was approved by Smithfield shareholders this week. The deal should be finalized before the end of the month.
USDA’s September Cold Storage report said stocks of frozen pork on August 31 were down 0.7 percent from a month earlier and down 7.8 percent from a year ago. Pork stocks were the lowest of any month since January 2012.
The crop condition report for September 22 said 55 percent of U.S. corn acres were in good or excellent condition. That was up 2 percentage points from the month before and up 31 points from a year ago.
Testing data from the National Animal Health Laboratory Network says that as of September 15, the Porcine Epidemic Diarrhea virus has been confirmed in 644 swine premises in 17 states. This is an increase of 32 locations from the week before.
Hog slaughter this week totaled 2.19 million head, up 0.5 percent from the week before, but down 6.5 percent compared to the same week last year. This was the sixth consecutive week with slaughter below the year-ago level and the tenth consecutive week with hog slaughter lower than expected based on the June pig report.
The low slaughter numbers are giving a boost to hog prices. The national average negotiated carcass price for direct delivered hogs on the morning report today was $91.94/cwt, down $1.03 from last Friday, but up $17.75 from a year ago. The eastern corn belt averaged $89.72 on the morning report today. The western corn belt averaged $94.54/cwt. There were not enough sales early today for a price quote from Iowa-Minnesota. Peoria had a live price top this morning of $63/cwt. Zumbrota, MN topped out at $61/cwt. The top price for interior Missouri live hogs Friday was $66.75/cwt, down 75 cents from the previous Friday.
The average barrow and gilt live weight in Iowa-Minnesota last week was 271.2 pounds, up 0.3 pound from a week earlier and up 1.0 pound from a year ago.
Friday morning’s pork cutout value based on mandatory price reporting was $101.96/cwt FOB plants, up $2.58 from the week before and up $21.68 from a year ago. Ham and butt prices were lower while loins and bellies ended this week higher than last week. The average hog carcass price is 90.2 percent of the calculated pork cutout value.
The October lean hog futures contract settled at $92.92/cwt today, up $2.87 from the previous Friday. December hog futures ended the week at $88.12/cwt, up $2.05 from the week before.∆
DR. RON PLAIN AND DR. SCOTT BROWN: Agricultural Economists, University of Missouri