Is the annual price peak behind us?Is the annual price peak behind us?
Lower costs contributed far more to profits than higher hog prices.
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Hog prices normally peak in midsummer. Last year’s weekly average base price peaked at $102.81/hundredweight in late July. It looks like this year’s highest hog price ($90.72/cwt in early June) will hold up as the yearly peak, though there is a possibility of a price jump in the next few weeks. The August lean hogs futures contract is trading at 91.575/cwt. The lowest hog prices are typically at the start and the end of the year.
Plain
The yearly pattern in hog prices is driven in large part by the yearly pattern in pork production. Weekly pork production is lowest in the summer and highest in the winter. The six major holiday weeks stand out as having exceptionally low pork production. Once August is behind us the odds of a new price peak become slim.
Plain
Surprisingly, the peak in retail pork prices typically comes much later in the year than the peak in hog prices. The last several years, the seasonal peak in grocery store pork prices has been in October. With time, the higher summer hog prices work their way through the system to grocery store prices. This is unfortunate timing. The fall runup in retail pork prices slows consumer interest just as weekly pork production is picking up from the summer low.
Plain
Retail pork prices averaged $4.88 per pound during June. This was down 3.9 cents from the month before but up 19.6 cents from a year ago.
Hog slaughter during the last seven weeks has been 2.4% higher than the same period last year and 0.1% higher than the June Hogs and Pigs report implied. The June hog survey market weight groups indicate August slaughter will be up 1.5-2% and September-November slaughter up roughly 1.5%. With lower feed costs, slaughter weights in the second half of 2024 could be up from last year. Barrow and gilt weights during the first five months of 2024 averaged 1 pound lighter than last year.
Plain
During the first half of 2024 U.S. pork production totaled 13.8 billion pounds, up 1% from the year before. USDA/ERS expects pork production to be up 3% this year and up another 1.5% in 2025.
Iowa State University monthly hog profit calculations declined to $14.85/head in June. This was the third consecutive profitable month and the lowest profit since April. ISU cost of production rose slightly in June after 13 consecutive months of decline. Year-over-year hog prices were up $2.54/cwt in June and cost of production was down $11.09/cwt liveweight. So, lower costs contributed far more to profits than higher hog prices.
Plain
It looks like cost of production will remain low. USDA is predicting an average corn price of $4.30 per bushel for the 2024-25 marketing year. Corn futures are trading under $4.50 through December 2025. That is far better than the $6 plus corn prices during the first half of 2023.
Plain
Liveweight prices for 51-52% lean hogs in June averaged $65.60/cwt, down 56 cents from the month before but up $2.54 from last June. USDA predicts 51-52% lean live hog price will average $59.13/cwt this year (up from $58.59/cwt last year) and below the $62/cwt average expected in 2025. Lean hog futures are indicating a steady price decline until December (~$67/cwt) then a price rally until June (~$90/cwt). October and December 2025 lean hog contracts are trading above their counterparts for 2024.
USDA is forecasting that U.S. 2024 pork exports will be up 6.2% year-over-year and will increase another 5.1% next year. USDA’s Foreign Ag Service expects the U.S. to be the world’s top pork exporter this year, passing up the European Union. Mexico and Japan are the two primary foreign destination for U.S. exports.
Plain
Pork imports are expected to increase 6.2% this year and 1.4% next year. In the first five months of 2024 26.0% of US pork production has been exported and imports equaled 4.2% of our pork production.
The USDA/FAS is predicting that the U.S. will import 6.977 million hogs this year, virtually all from Canada. This is the most hog imports since 2008. They expect us to export 76,000 hogs.
On Thursday USDA/NASS will release three monthly production reports - Cold Storage, Livestock Slaughter, and Poultry Slaughter.
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