by RON PLAIN and SCOTT BROWN
Hog prices stabilized this week, as the national average negotiated carcass price for direct delivered hogs on the morning report today was $83.34/cwt. Though there was no quote for last Friday, today's level was only down $0.34/cwt from a week ago Thursday, and $1.33 higher than a year ago. There were no morning price quotes today for the eastern corn belt, the western corn belt or for Iowa-Minnesota. Peoria had a top price today of $58/cwt, while interior Missouri live hogs had a top of $60.75/cwt.
The pork cutout value fell again this week, as the belly price decline of 15.7% more than outweighed smaller gains in picnics, ribs and hams. This morning's cutout was $93.86/cwt FOB the plants, down $3.07 from last Friday, and now $0.41 lower than a year ago. This is the first Friday below year ago levels since January 31. Today's hog carcass price was 88.8% of the cutout value, up from 85.5% last week.
Pork exports may be losing a little steam given high pork prices in recent months and a stronger U.S. dollar. Monthly trade data for September released this week showed a sixth consecutive monthly decline, with September 2014 exports 13.2% below last year's level. Reduced trade to Asia is accounting for most of the decrease, as exports to Mexico continue to grow. Total beef plus pork net exports in September were at the lowest level since August 2010. Due to high shipment volume earlier in the year, total pork exports for the first nine months of the year still lead the first nine months of 2013 by 1.8%.
Domestic demand for meat, particularly for pork, continues to be strong. The 12-month moving average for pork retail demand has posted nearly 5% growth or better for all of 2014, with the recently available September reading the highest yet this year. Beef retail demand has also shown improved growth in recent months. As broiler-type chicks placed data released this week continues to point to a strong chicken production increase in 2015, and pork production is set to post a healthy jump next year as well (assuming less negative effect from the porcine epidemic diarrhea virus), strong demand will be necessary to avoid sharp declines in hog prices.
This week's hog slaughter totaled 2.232 million head, up 1.8% from the week before but down 2.4% from the same week last year. This year's year to date slaughter is 5.2% below 2013. However, higher slaughter weights continue to compensate for fewer animals coming to market. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 285.2 pounds, up 0.4 pounds from the week before and 5.5 pounds heavier than the same week last year.
The December hog contract ended the week at $88.77/cwt, up 75 cents from the previous Friday. February closed at $88.42, up 37 cents. The April lean hog futures contract gained 95 cents to $90.10/cwt, and May hogs advanced 35 cents to $90.75/cwt.
December corn closed today at $3.675, down 9.25 cents from last Friday. Despite some large daily movements, December soybean meal futures finished at $390.40 per ton, up just $1.40 from last week. The November Crop Production report released on Monday will provide a revised look at the size of this year's corn and soybean crops.