by RON PLAIN and SCOTT BROWN
The July supply and demand report released yesterday by USDA continues to point to a large corn crop this fall. Current estimates call for nearly 14 billion bushels of corn, a record amount of production that is 6.6% larger than the next highest harvest from 2009. Should this materialize and 2013/14 corn prices fall into the $4.40-5.20 per bushel range as projected by USDA, pork producer profits could flip from the sharp losses posted the last couple of years to moderate profitability beginning this fall.
The number of new porcine epidemic diarrhea virus (PEDv) cases has dropped recently. While it is still unclear whether the cases already reported will have a noticeable effect on herd productivity this year, it appears that hopefully this disease outbreak has almost run its course.
Pork export data for the first five months of 2013 shows all shipments down nearly 13% vs. year ago, though results are mixed for our major pork markets. Our largest two international consumers in recent years, Japan and Mexico, have both reduced purchases 5-6% from 2012, though May exports were up vs. year ago to both these destinations. Shipments to Canada are up a little thus far in 2013, but China and Russia have substantially cut purchases of U.S. pork, accounting for 78% of the total year to date decline.
The pork cutout value on Friday morning was $103.00/cwt FOB plants, losing $4.55 from a week ago. Though bellies were up for the week, all of the other primal cuts were lower, with ribs and butts down double-digit percentages on the week.
The national average negotiated carcass price for direct delivered hogs on the morning report today was $95.51/cwt, down $1.73 from last Friday. Hogs in the eastern corn belt were at $95.32/cwt, with the western corn belt hogs at $97.78 and Iowa-Minnesota prices ended the week at $97.80/cwt. Peoria had a top live price this morning of $65/cwt. The top for interior Missouri live hogs Friday was $72/cwt, up $1.50 from the previous Friday. The average hog carcass price was 92.7% of the cutout value.
Hog slaughter this week totaled 2.038 million head, up 13.9% from last week (which included the Independence Day holiday) and up 4.0% compared to the same week last year. Year to date hog slaughter is virtually even with 2012.
The average barrow and gilt live weight in Iowa-Minnesota last week was 272.9 pounds, down 0.4 pounds from a week earlier but up 3.9 pounds from a year ago.
The July lean hog futures contract closed at $102.15/cwt today, down $0.20/cwt from the previous Friday. August hog futures ended the week at $95.125/cwt, down $2.625 from the week before.