Jim Long, President-CEO, Genesus Inc.
U.S. Hog Market Continues to Lose Money
This past week was much of the Same with U.S. markets continuing to be soft and slaughter hog prices $20-30 per head below cost of production.
The one bright spot was the U.S.D.A. pork cut-outs which jumped a couple dollars getting to 62₵ lb. om Friday (53-54% lean hog 52₵ lb.).
For hog prices to rebound pork cut-outs must increase so that packers will pay more for hogs.
Hog Marketing’s year to date have increased 2%. 53-54% lean hogs last year at this time were 67.29 they are now 52₵ lb.
So a 2% increase in hogs has led to a 28% decrease in hog prices? That’s a huge difference and we attribute most of the price difference to Tariffs by Mexico and China on U.S. pork.
This past Friday President Trump asked China to remove all tariffs on U.S. Farm Products (including Pork at 70% tariff).
“I asked China to immediately remove all tariffs on our agricultural products based on the fact that we are moving nicely with trade discussions.” “I did not increase the second launch of tariffs to 25% March 1st.” “This is very important to our great farmers- and me.”
Our Contacts in China tell us the above from President Trump is being reported in China news.
It appears hog weights are lower than a year ago. A year ago now carcass weight average on the U.S. National Daily Base lean was 216.64 lbs., this year it’s at 213.25 lbs. (average of 475,000 head). The lower average weight certainly indicates no back up of hogs. This is positive for hog market going forward.
Not much has been written on the effect on Grain and Oilseed usage with the huge decrease in China’s hog supply.
Let’s surmise 120 million less hogs per year at some point. That is about 40 million tonnes of feed. Over 1 million truck loads? 20,000 less truck loads a week? In our mind it will lower soybean demand for sure. China was about self-sufficient in corn before the herd liquidation. Will they become exporter?
China announce last week a plan to encourage companies-farmers to build small slaughter plants so hog movement will be restricted. Makes you wonder? Inventory of hogs was already down half the U.S. inventory in December (36 million).
All hogs have always been slaughtered in China. What will happen to existing slaughter plants? There certainly won’t be hogs to fill existing capacity. Less Hogs – means less hogs to slaughter- less pork to sell. It’s a Black Swan Event.
How lame are we? Pork Cut-outs closed at 61.92₵ lb. Friday. Choice Beef Cut-outs Friday closed at $2.21 lb. Beef almost 4 times the price of pork.
Duh! Maybe it’s the taste and flavor?
Marbled pork i.e. Bellies were $1.77 lb. Friday. Loin’s 77₵ lb. Hams 44₵ lb.
To many years being led by a Pigs Into Chicken Scenario has destroyed our loins and hams. Consumers are telling us directly what they think of our products when they vote with their money. The answer is in our opinion producing pork that has taste and flavour. That won’t be accomplished by Mongrel Hybrid Boars and synthetic Hybrid Durocs.
Only Real Durocs are registered. Durocs only registered NSR Durocs can be used in Trademarked U.S. Duroc Pork Program. If we want to drive demand and increase prices “white meat” should not be our goal. It’s obvious that “Red Meat” is what consumers want and will pay more for.
Danish Crown is the major packer and pork exporter in Denmark.
Below is extract of article by Danish crown:
It is clearing up in the east
February 28, 2019
The world market for pork can be characterized by silence before the storm. A storm of tailwind.
The question is not whether the prices will soon increase, but only when and how quickly it will happen, says Danish Crown’s global sales director Lars Albertsen:
Everyone is looking at China. No one knows what the consequences of ASF have been for the Chinese production this year. The latest forecast I’ve seen predicts a 10 to 20 percent decline in Chinese production. And when half of the world’s pigs are slaughtered in China, this corresponds to a decrease of between 5 and 10 percent in global production. It can become a huge catalyst for world market prices.
The optimism is further fueled by the fact that the supply of pigs in the northern part of Europe is declining, so even though there is a slight increase in production in France and Spain, overall expectations are a decline across the EU of 1-2 percent this year.
“It doesn’t sound like much, but it is enough to have the market return as soon as exports out of the EU begin to rise. Our expectation here in the first quarter is a slight increase, but I do not think we will reach 9 kroner (1.38 USD) by 1 April. In the second quarter, on the other hand, it may go strong. Here, the weather will have quite a large influence, as soon as the thermometer passes 20 degrees in southern Europe – or actually throughout the part of Europe that lies south of Frankfurt – then there is a fairly noticeable increase in the consumption of pig meat in Europe”, says
This post was written by Genesus