 Price Calculation | Ontario Pork's Industry
Friday, December 6, 2019

# Price Calculation

Understanding the New Mandatory Price Reporting System

Average Price: The average value of the middle 70% of hogs reported.
Low Price: The average value of the bottom 15% of hogs reported.
High Price: The average value of the top 15% of hogs reported.

• Each of these calculations use all standard and organic hogs, with futures sold hogs excluded;
• Prices will not be weighted by plant (i.e. low 15% is the average price of the lowest 15% of all hogs;
• Three categories of hogs are reported (low 15%, middle 70%, high 15%) with the corresponding price and grading information;
• Weekly implied premium and average yield have been added to the information reported.

Price are reported as \$/ckg Total Value DW F.O.B. Yard.  (Dollars per hundred kilograms Dressed Weight Total Value Freight on Board Yard)

These prices differ from traditional 100 index base prices such as the 100% formula price or the Pool and Pool Plus prices. The total value prices include all index premiums and other premiums (such as delivery, loin depth, feeding program etc.)

## For Example:

(1) A 95kg hog with a \$125/ckg base price, a 110 index, and no other premiums would be reported as \$137.50/ckg DW Total Value. (125 * 1.10 = 137.50)

(2) A 95kg hog with a \$125/ckg base price, a 110 index, and a \$2/hog Sunday night premium would be reported as \$139.60/ckg DW Total Vale. (((125 * 1.10 * .95)+\$2)/.95))

Total Volume of Ontario Hogs Sold:
The total number of hogs sold by Ontario producers, including all hogs sold in province and out of province.

Volume of Hogs Included in Price Calculations: The total number of hogs included in price calculations. Futures based hogs are excluded from this number.

Weekly Implied Premium: The implied weekly premium is reported as \$/ckg DW. This is the difference between the average price (i.e. total value) and the average 100% formula price for the same week.  The implied premium would account for adjustments in the base price, and all premiums and discounts (i.e. index, delivery time, loin depth, feeding program, etc.).

Weekly Average Yield: This is also referred to as the dressing percentage and is calculated using fat and muscle measurements.

## Price Update for the preceding week, the week of: Feb.12, 2012

 Description Value Average price /ckg DW total value \$180.57 Low price /ckg DW total value \$163.80 High price/ ckg DW total value \$204.98 Total volume of Ontario hogs sold was 90,708 Weekly average weight of Ontario hogs was (/ kg DW) 96.73 Weekly average fat measurement of Ontario hogs (mm) 18.41 Weekly average muscle measurement of Ontario hogs (mm) 63.94 Weekly Average Yield Percentage 60.88 Weekly Implied Premium \$23.11

Go to Price Reporting

# Price Calculation Information

The USDA is changing the National Daily Direct Hog Prior Day Report – Slaughtered Swine (201) to provide more information. The report will now include a Negotiated Formula Price the price for these animals were previously included under the category Swine or Pork Market Formula. As a result CME constructed price calculation will be updated as follows: CME Constructed Price = (Producer Sold Negotiated Hogs (Head Count * Average Net Price * Average Carcass Weight) + Producer Sold Swine or Pork Market Formula hogs (Head Count * Average Net Price * Average Carcass Weight)+Negotiated Formula(Head Count * Average Net Price * Average Carcass Weight)) divided by (Producer Sold Negotiated Hogs (Head Count * Average Carcass Weight) + Producer Sold Swine or Pork Market Formula hogs (Head Count * Average Carcass Weight)+Negotiated Formula (Head Count * Average Carcass Weight))

For example, on February 22, 2016: CME Constructed Price = (( 15,990 *64.62 * 207.56) + ( 227,103 * 66.48 * 214.66) + (15,990 *64.62 * 207.56)) / (( 15,990 * 207.56 ) + ( 227,103 * 214.66) + ( 15,990 * 207.56 )) = \$66.26 (US/cwt)

This will be substituted into Ontario Pork’s Standard Formula

201 Constructed Price

- US \$0.56/cwt

x  U.S dressing percentage 0.74
x  Metric conversion 2.2046
x  Exchange rate (Bank of Canada daily average
)
divided by Ontario dressing percentage 0.80
divided by 1.1195 divisor

= 100% Ontario Base Formula Price 100 Index

EXAMPLE: If 201 Constructed = \$66.26/cwt and Exchange Rate = 1.3685, then

( 66.26 – 0.56) X 0.74 X 2.2046 X 1.3685 / 0.80 / 1.1195 = \$163.78 per ckg 100 index 