In this file:
· Slaughter trends, pork exports support hog prices
· Hurt: Profits Looming for Struggling Pork Industry
· Hogs watching kills, weather and cattle keying off demand
Slaughter trends, pork exports support hog prices
Rick Jordahl, Associate Editor, Pork Network
Although December retail pork prices slipped 5.1 cents from November, favorable slaughter trends and robust U.S. pork exports will team up to support hog prices in 2013, according to Ron Plain, University of Missouri Extension agricultural economist.
Hog slaughter is running slightly below expectations as are slaughter weights, Plain says. “Since December 1, slaughter of U.S.-raised barrows and gilts has been down about 0.1 percent and slaughter weights were down slightly also which are supportive for hog prices.” He expects 2013 hog prices to average above those of 2012 but below prices seen in 2011.
Despite the slightly lower domestic pork demand seen in December, Plain says pork’s appeal may increase among budget-conscious consumers. “Tight supplies of competing meats and record retail beef prices also should help pork demand,” he says.
Plain expects 2013 hog slaughter will be up very slightly from the 2012 level but still below 2008 and 2009. Hog slaughter in 2012 was the third highest recorded after 2008 and 2009.
Meanwhile, U.S. pork exports, which are expected to set a new record for 2012, provide ever-increasing support for hog prices. Through November 2012, pork exports are 5 percent ahead of 2011’s record pace...
Hurt: Profits Looming for Struggling Pork Industry
USAgNet - 01/18/2013
Pork producers could be on the verge of turning profits after suffering several months of losses caused by drought-decimated feed resources, Purdue Extension agricultural economist Chris Hurt says.
Widespread struggles began in the spring of 2012 and have continued into this winter. But with feed prices reaching their peak last summer, Hurt said there is now light at the end of the tunnel.
"Feed prices reached a summit in the third quarter of 2012 with the peak of the drought," he said. "Estimated total hog production costs shot up $10 per live hundredweight, reaching an estimated $72. Costs last fall and this winter dropped about $4 per hundredweight and are expected to moderate an additional $8 with normal 2013 crop production.
"By next fall, that could put estimated costs of production around $60 per hundredweight."
Reduced beef supplies and strong pork export markets also are expected to drive higher hog prices. Live hog prices averaged about $62 per hundredweight in 2012 but are expected to hit $66 for 2013.
Hurt said that while prices will increase to an average of about $63 per hundredweight in the first quarter of this year, $71 in the second quarter and $69 in the third quarter, producers will continue to suffer losses until spring.
"For the immediate future, losses will continue in the first quarter of 2013 and are expected to average about $15 per head," he said. "The return to profitability is expected to come in late-April or early May when the spring hog price rally is under way and as meal prices edge lower with the South American soybean harvest.
"Profits are projected at about $10 per head for the second and third quarters before returning to break-even in the fall of 2013 and winter of 2014."
Even with profitability on the horizon, Hurt said producers need to be cautious about expanding their herds. Extreme drought in the western Corn Belt and Great Plains continues to threaten feed supplies and profitability because poor 2013 crops in those states could cause corn and soybean prices to hit record highs...
Hogs watching kills, weather and cattle keying off demand
By Rich Nelson - Futures Magazine
January 17, 2013
Hogs: The market feels it has Monday’s holiday about dialed in. In 2011 packers ran a kill of 360,000 head. Last year’s run totaled 376,000. We would expect something similar to that on Monday. Regular kills are running 430,000 head per weekday right now. Though there is a drop in packer needs for early next week, keep in mind producers are not rushing to market at that time either.
Monday’s temps are seen at a high of 9 and a low of 1 degrees in Iowa. While this is a short-term issue it is interesting to see the market’s viewpoint on prices one month from now.
February futures are running just over 85.00. That is slightly above the current cash hog price, lean hog index, which is just under 85.00. The market is saying there will be no rally in cash hog prices between now and Feb. 14. Looking back through our database, we see that cash hogs have gained between Jan. 15 and Feb. 14 in eight of the past 10 years. The average of all 10 years was a 4.81 gain. The average of the eight positive years was a 6.46 gain. Our bias still holds that this hog market is undervalued. Our only question is when futures will be ready to come to that conclusion as well…Rich Nelson
Cattle: In the past few days, we have spent some time discussing the simple sense of malaise that the cattle market is giving off.
Packers are trying to get a hold of this margin situation. USDA’s report on Friday moved much of this year’s production shortfall out of the first half of the year to now the back half. There is a lot of talk about negative demand right now. Newswires are discussing it and now some cash sources are bringing it up.
What is interesting though is this demand discussion has not shown up in the numbers yet. Since the end of 2012 choice boxed beef is down 69 cents while select is up 3.87. That is a clear net increase. During that time, cash cattle has now fallen $2 from the end of 2012 $127. So wholesale beef is up but cash cattle is down. That sounds like a cash cattle issue rather than a beef demand issue...