Insight: Ron Plain’s hog report
Statistics Canada has released the results of their latest survey of Canadian hog farms. They concluded the Canadian swine breeding herd on April 1 was 0.6% smaller than a year ago, but market hog numbers were up 1.6%. The Canadian sow herd has now been below the year-earlier size for 24 consecutive quarters and is only 81% of the size of April 2005. When combined with USDA’s March survey, it appears that the March hog inventory in the two countries was up roughly 0.8% from a year earlier and that spring farrowings will be down 1.9% and summer farrowings down 2.1%.
Smithfield has completed the sale of their Dalhart, Texas hog production complex to Cargill, who plans to use the facility to produce pigs for finishing in the Midwest.
The U.S. Commerce Department says the real gross domestic product grew only 1.8% in the first quarter of 2011, down from 3.1% growth in the fourth quarter and the slowest growth since the second quarter of 2010. It is generally felt real GDP growth needs to be above 2.5% to cause the unemployment rate to fall.
The average price of gasoline is now $3.93 per gallon, up $1.03 from a year ago and $1.83 higher than two years ago. Historically, high gasoline prices have been a drag on meat demand.
It was not a good week for prices. Pork cutout, cash hogs and hog futures were all lower. The national average negotiated carcass price for direct delivered hogs on the morning report today was $90.12/cwt, down $4.02 from last Friday’s record. The eastern corn belt average this morning was $89.67/cwt. The western corn belt average was $90.93. Iowa-Minnesota hogs averaged $90.86/cwt on the morning report. Friday’s top live hog price at Peoria was $62.50/cwt while Zumbrota had a top of $62/cwt. The top for interior Missouri hogs was $64.50/cwt.
USDA’s Thursday afternoon calculated pork cutout value was $91.76/cwt, down $3.30 from the previous Thursday with loins, butts, bellies and hams all lower. This morning’s national average hog carcass price was 98.2% of the pork cutout value.
Hog slaughter totaled 1.950 million head this week, down 5.2% from the week before and down 3.6% compared to the same week last year. Iowa-Minnesota live weights for barrows and gilts last week averaged 272.9 pounds, up 0.7 pound from the week before and up 3.0 pounds compared to a year earlier.
The May lean hog futures contract ended the week at $95.27/cwt, down $6.78 from the previous Friday. The June contract settled Friday at $95.22/cwt. July hogs settled at $96.40 and August hogs ended at $97.22/cwt. The 5 previous Fridays have had four hog futures contracts (May-August) close above $100/cwt. Now there are none above $98.
USDA’s latest crop progress report estimates 9% of the corn acres was planted by April 24, down from 46% planted on that date last year and a 5-year average of 23% planted.
The May corn futures contract gained 17 cents this week to end at $7.54/bushel. July corn ended the week at $7.565/bushel.