Last week proved challenging for lean hog futures, with the April contract closing at $87.675 per hundredweight (cwt) on Friday. This was a decline of $5.52 from Tuesday’s close. The drop in hog futures was partly attributed to weakening cutout values.
Falling Pork Cutout Value
Pork cutout values saw a significant decline last week. On Monday afternoon, the average pork cutout value was $102.47/cwt, but it had dropped to $94.03/cwt by Thursday afternoon. By Friday afternoon, the value had recovered to $97.07/cwt, but it was still $5.40/cwt lower than the start of the week.
Slaughter Data and Forecasts
Over the past 12 weeks (since early December), hog slaughter has been down 1.5% year-over-year. According to the December Hogs and Pigs survey, the market hog inventory suggested a smaller decline of 0.4%, but this projection was slightly off, possibly due to winter weather impacts. If the spring marketings follow the lightweight December inventory, March-May hog slaughter is expected to rise by approximately 1.3% year-over-year.
Profits Higher Than Expected
Despite the weak market performance, hog producers saw better-than-expected profits this winter. According to Iowa State University (ISU) calculations, producers made $2.67 per hog marketed in January, a gain of $37.53 compared to the same month last year. January is traditionally one of the least profitable months, but this marked the first profitable January since 2018 and the tenth consecutive month of profits after seven months of losses.
For the year 2024, the average profit per hog marketed was $4.70, the highest since 2022. ISU estimated the cost of production for January marketings at $62.01/cwt, the highest since September, with rising feed prices expected to push costs higher in the coming weeks.
Hog and Retail Pork Price Trends
The liveweight price for 51-52% lean hogs averaged $59.34/cwt in January 2025, marking the lowest month since February but showing a $9.51 increase compared to January 2024. National negotiated carcass prices averaged $80.49/cwt in January, down slightly from December but significantly higher than the same time last year.
Retail pork prices also saw a rise, with the average price in January reaching $4.945 per pound, the highest since September and 15.8 cents higher than January 2024.
Pork Production and Price Forecasts
The USDA reported a 1.8% increase in pork production for 2024 and predicts a 2.7% rise in production for 2025. The USDA also forecasted that the average liveweight price for 51-52% lean hogs in 2024 would be $64/cwt, up from the $61.56/cwt average in 2023.
The futures market predicts that hog prices will peak above $100/cwt during the summer before declining to a low near $75/cwt around Christmas. Hog prices in 2026 are expected to be lower than in 2025.
Rising Corn Prices
Corn prices continue to rise, with Omaha corn prices averaging $4.88 per bushel last week, up from $4.50 per bushel at the start of the year. The futures market indicates that corn prices may climb slightly above $5 per bushel this spring before stabilizing in the high $4 range for the next two years. Corn futures for 2026 and 2027 are currently trading around $4.80 per bushel, with a possible fluctuation of 20 cents.
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