December 19, 2016
Is There a Santa Claus? U.S. Hog Farmers Hope SoU.S. hog prices, lean hog futures, and small pig prices continue a rapid rebound heading towards Christmas. Santa Claus has come early for American hog producers.
- Cash lean hogs have jumped $20 per head in the last four weeks, now $0.57/lb
- U.S. cash early weans were down to $5 per head. Last week, they averaged $47 per head. Anyone selling cash early weans will have a better Christmas.
- In the lean hog futures June has gone up from a low of $0.67 at the end of September to a close last Friday of $0.78. A $20 plus increase.
- A few weeks ago, some profitability farrow to finish projections for the next twelve months showed profits of $5 per head. Current models indicate $20 per head.
- We don’t want to forget our packers so close to Christmas. With U.S. pork cut-outs at $0.78/lb and hog prices of $0.57 on a 210 lb carcass, packer gross margin is over $40 USD per head. With gross margin at this level or higher for the last four months, every day has been Christmas for packers. What is absolutely fantastic is that with U.S. hog marketings at 2,544,000 last week, USDA pork cut-outs are $0.78/lb. It is record pork production, and we doubt if anyone predicted such high pork cut-out prices in the face of this record deluge. It reflects a demand for pork in retail, food service and export that is absolutely positive. Throw in the U.S. dollar at extremely high levels relative to foreign currencies and the demand is even more extraordinary.
- This past week, we attended the Prairie Livestock Expo in Winnipeg, Manitoba, Canada. Manitoba has about 300,000 sows. What we observed is an industry licking its wounds from the losses of the last half year, but cautiously optimistic of the future. We heard of no new sow barn construction and just a few finishers being considered. We expect Manitoba will continue to ship about 60,000 small pigs a week to the U.S. The U.S. has the capacity to finish, strength of currency, and producer demand, which will continue to pull the small pigs south.
- At the Expo, we had some producers ask why the Des Moines Iowa based CEO and COO both left Choice Genetics at the same time. We don’t know. We expect the challenge of trying to operate an added value genetic company like Choice Genetics, maintain customers, and even add any is very difficult after dealing with the bankruptcy they experienced. The Choice brand was severely damaged by the bankruptcy. My father always told me “it’s easier to give birth than bring the dead back to life.” We understand the new CEO of Choice Genetics is based in Europe.
Agro Eco Receives Genesus PigsOn Wednesday 23rd November, Agro Eco received 1,317 pigs from Genesus to complete the stocking of their new 2,700 sow Nucleus farm in Voronezh. AgroEco is based in Voronezh, Russia and has 30,000 sows today. They are currently expanding to 60,000. Also under construction is a slaughter plant that will be used to kill and process all production. The farm, which has Yorkshire, Landrace and Durocs, expects to start farrowing towards the end of December this year.
Pigs being loaded to trucks at Sheremetevo CargoGenesus is very proud to be chosen as the genetic supplier of Agro Eco, who are recognised as an excellent producer within Russia. There are very many similarities between Russia and Canada, such as climate and scale of operations. Russia is nearing self-sufficiency in pig production and is targeting Asia to develop export markets. Canada is a country that exports more than 50% of its production and Genesus is the major supplier of genetics to China and South East Asia.
This post was written by Genesus