U.S Hog Prices Continue to Increase

Last week U.S lean hog prices 53-54% increased from 56¢ to 61¢ lb. or more then $10 per head. In the last couple weeks the market has gone up 10¢ lb. or $20 per head. Markets are strange, we went day upon day lower for what seemed a month. In that time losing next to $40 U.S per head in hog market value. The market hits a bottom, then day upon day it goes up.

Some Observations

• A year ago 53-54% lean hogs were averaging 58.50¢ lb., they were over 61¢ last week this year. Last year the market roared from this point into the 80’s.

• Last week the U.S industry marketed 2,363,000 hogs, the week before 2,436,000. A decrease of about 70,000 head. We expect hog marketing’s will decline seasonally as will slaughter weights. In the coming weeks the hog price will continue to rise on decreased pork supply.

• Sometimes you wonder how good we are as an industry. Last week USDA carcass cut out closed at 68.61¢ lb. At USDA Beef cut outs Choice grade 600-900 lb. carcasses were 221.29¢ lb. and Select 600-900 lb. 204.58¢ lb.

We don’t need a computer or an ag-economist to figure that currently Pork (68.61¢) is 1/3 the price of Choice Beef (221.29¢). The price in the market reflects supply and demand.

How lame we are to have a product 1/3 the price of beef. In our opinion beef is not winning because of price, that is obvious. So what is it? Consumers vote with their money. They obviously prefer the taste of beef to pork. It’s sad. We are missing a huge opportunity. We had leadership from the USDA and National Pork Board to put in a new voluntary grade system. A system that would identify the best marbled and reddest pork as the Prime and Choice products. A system that is to a more level field with the eating attributes of beef. Did we as producers embrace and support the avenue to ever better demand and price? We think not so far.

As a person once said to us, “They are called farmers not marketers.”

To drive real demand and move the bar on price and per capita consumption, we need to embrace the new grade system as fast as we can. This is a reason why the Japanese importer companies pay more already for higher marbled and redder pork. It tastes better and their consumers will pay for the quality.

Pork at 1/3 the price of Beef. It is embarrassing. The upside is the price spread will drive demand because pork is so cheap. Be thankful for beef prices so high as they will pull Pork prices higher.

As we wrote earlier U.S hog prices are higher now then a year ago (+ $5.00 per head). This despite more hogs coming to market (supply), last week 64,000 more then a year ago. Maybe the high beef price is helping?

• In the coming weeks it will be interesting if the increased packer capacity eliminates Saturday slaughter. Last week it was 52,000 on Saturday. A year ago Saturday was 103,000. If we get to no Saturday slaughter (or very small), we expect to see strong hog prices as it will truly indicate fewer hogs.

• Will be at the British Pig Fair for the first time (May 15-16) at the Genesus UK exhibit. It should be interesting to meet British producers and get their perspective. They were the first to see the effects of animal welfare regulations.

• The U.S Pork cold storage report indicates at end of March Pork in storage was 611 million lbs. the month before 609 million, little change. A year ago it was 545 million lbs. More Pork in storage but in our mind not a big factor in where prices are going.

• U.S sow slaughter Jan-March (3 months). This year 756,800, last year 749,300. Not much change. We expect this indicates sow herd is increasing but only slightly.

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This post was written by Genesus