Jim Long, President-CEO, Genesus Inc.

Swine Industry Random Observations

We have to scour for anything to write up about other than the Coronavirus. Not much we know, unlike TV news anchors who have become virus experts in the last few days. So this week we are going to make some random observations- maybe relevant or maybe not.

The U.S.D.A 53-54% average lean hog price increased from 56.44 to 58.47 in a week.
- A year ago 53-54% was 53.97
- Almost $10 a head higher than a year ago
On Friday U.S.D.A pork cut-outs reached 70.04₵ a lb.
- First time in several weeks over 70₵ an lb.
- Increased price means better demand.
U.S. Pork Exports set another weekly high at 44,500 metric tonnes, led by China at 16,120 metric tonnes
European Hog Prices remain high.
- Spain at 1.54 Euro/Kg., is at record levels (78₵ a lb.)
- China’s average price is 36.66 RMB/Kg. ($2.38 a lb.)

Our Farmer logic

U.S. lean hog prices rising, U.S.D.A. cut-outs increasing, U.S. pork exports at record level and European Pork is more expensive, while hog prices in China are at levels beyond normal comprehension.
Sounds like a recipe to bake a happy cake?

Not so Fast…We have lean hog futures.

They have collapsed despite many positive market directions.
Lean Hog Futures based in Chicago – (Las Vegas with no rules) seems to create instant negativity in our industry.
No other hog producing country in the world has lean hog futures except the U.S.A.
92% of the world hog industry seems to have managed to operate without lean hog futures.
From what we can see every other country has higher hog prices than the U.S.A (Canada)

Quite the system, Canada is the wagging dogs’ tail of the U.S. futures and pricing system.

Last time we wrote about our observations of the effect Lean hog futures we got more response comments than any time over the past twenty years of writing. All supportive of the observations except one.

We know that nothing will change- lean hog futures will continue as long as money flows into them and there is a whole industry of brokers and agents collecting commissions on the activity with obvious vested interest to perpetuate the current system.