Pork Commentary, December 10, 2018
Jim Long, President-CEO, Genesus Inc.
Hog Weights continue to surprise?
It appears that weekly U.S. hog marketing’s are tracking very similar to a year ago. This past week 2,558,000 last year same week 2,541,000 a 17,000 head difference.
What is real interesting to us is the average weights of the National Daily Base Lean Carcasses. A year ago they were averaging 216.73 lbs. this past week 212.46 lbs. a month ago 212.19 lbs.
Our observations despite hog marketing’s per week staying near average levels hog weights have not increased over the last month. Also we are a good 4 lbs. lighter year over year. Currently our farmer arithmetic tells us that is equivalent to between 750,000 – 1 million hogs that have been already marketed versus if they were being held (216 versus 212 lbs).
Our speculation continues that the U.S.D.A. September hogs report over estimated hogs in inventory. We expect there has been some slippage in numbers due to hurricane effects in North Carolina.
We always thought it was strange that the U.S.D.A. had 2 million more market hogs in September’s inventory compared to the year before. Our canary in the coal mine was the continued reports of cash feeder pig demand for empty finishing spaces. Didn’t add up. 2 million more hogs in inventory should have meant all barns jammed full. No way close to 2 million spaces had been built in the past year. Especially when we heard some of the major hog builders were certainly not long on work.
To us this means we could have the makings of a cash rally when as the saying goes: “The dog hits the end of the chain”.
To have a cash hog rally Pork Cut-outs need to move higher, which they are. On Friday U.S. cut-outs closed at 73.63 lb. up from 67 a couple weeks ag. Lean hogs are now at 56₵ lb. We expect cut-outs to continue to move higher. The spread for packers is good, we expect packers gross margin will narrow in the short term.
Lots of packer capacity relative to hog supply in the coming weeks, we expect lean hogs to over 60₵ lb. soon.
Reality of Production
In the Pig Change – Bench Mark Magazine they show the Mean Production for last nine years. The latest analysist of 340 farms.