Jim Long President – CEO Genesus Inc.


June Lean Hog Contracts Reach New High

March 14, 2016

Last week Friday, US June lean hog contracts closed at 83.075¢ per pound a life of contract high. Since mid-November June lean hogs have gained 12 or about $25 per head. As a producer it’s great to see. Rising lean hog contracts reflect growing faith in pork demand and we believe the realization that hog market numbers are not growing appreciably. The constant discussion of lack of shackle space has hampered potential price increases. As that discussion indicates there will be price pressure lows. Last week the US marketed 2,215,000 hogs down 11,000 from a year before. Obviously less hogs per week year over year is not adding pressure on packer shackle space.

United States and Canada Inventory

The US – Canada Hogs and Pigs Inventory was released last week. It is done twice a year. Since pork flows quite freely between both countries the combined Hogs and Pigs Inventory is important to show what total supply will be. It’s a continental market.

United States and Canada

(United States December 1, 2015 – Canada January 1, 2016)

 (1,000 head) 2012 2013 2014 2015 2015 as a % of 2014
Kept for Breeding 7,031 6,968 7,157 7,240 101
Market 71,863 70,747 73,735 74,319 101
Under 50 lbs. 23,928 23,067 24,495 24,247 99
50 – 119 19,103 18,494 19,826 19,748 100
120 – 179 lbs. 14,775 14,867 15,338 15,568 101
180 pounds + 13,998 14,319 14,126 14,755 104
Sows Farrowed 7,113 6,911 7,233 7,113 98
Pig Crop 73,118 71,642 74,691 75,385 101


  •  Breeding herd is up 1%, an increase but not a huge increase relative to what the myth makers in the industry were predicting.
  • Market numbers up 1% – equal to the US population increase. If per capita consumption can hold most if not all extra pork can be domestically consumed.
  • Under 50 pounds are down 1% and Sows farrowing are down 2%. Both a reflection of extender issues that hit the US – Canada industry. We can have rebound numbers in the future leading to more supply.
  • Pig Crop 75.385 million (6 months). Simple Farmer Arithmetic. 75.385 x 2 = 150.770 (one year) divide by breeding herd 7,240 = 20.82 pigs per breeding herd. Not exactly 30 or even 25. Half of herd will be below 20.82.

Canada – Hogs and Pigs Inventory (1,000 head)

January 1 Inventory 2013 2014 2015 2016 2016 a % of 2015
Kept for Breeding 1,212 1,211 1,218 1,238 102
Market 11,398 11,729 11,947 12,022 101
Sows Farrowed 1,303 1,241 1,248 1,293 104
Pig Crop 14,212 13,527 13,656 14,526 106

The Canadian Inventory Report as of January 1, 2016 Observations

  •  Canada has expanded breeding herd 20,000 – it was flat for the previous three years.
  • Market number up 1% – In Western Canada there is excess packer capacity. In the East of Canada there is not enough which is leading to more market hogs going to the USA.
  • Sows farrowed and Pig Crop are up compared to last year but about equal to 2013.
  • Pig Crop 14,526 million – farmer arithmetic 14,526 x 2 = 29,052 million head a year divide by breeding herd 1.238 million = 23.46 pigs per breeding herd. The US – Canada (including Canada) average was 20.82. It appears to us that Canada pigs per breeding herd is almost three pigs better than the US. Some Thoughts Why:
  • We observe Canadian producers are less focused on least cost feed. Feed to maximize performance.
  • General health of the Canadian herd is probably better.
  • Canada has a higher percentage of sow herds managed by owner operators with good levels of stockmanship.
  • Canada has a higher level of F1 gilt usage and less reliance on back cross – mongrel breeding gilts. This leads to higher litter size in Canada relative to the US. Genesus only produces F1 gilts as ­­­parents for this very reason. Why would you ever want in a business to use a combination that doesn’t allow maximum productivity?


 June lean hogs hit contract high. We expect it to continue to go up as supply relative to demand will allow higher pork prices. When we look at USA – Canada swine inventories we do not see a significant increase in production. Concerns about shackle space is overblown, especially when you consider the new plants under construction.

“Drive thy business or it will drive thee.”

Benjamin Franklin


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This post was written by Genesus