Jim Long President – CEO Genesus Inc.
April 21, 2014
US Hog Supply DropsIt was good to see US hog marketings at 2,007,000 last week down 7% from a year ago. To keep hog prices high we need to see lower year over year numbers. Hog numbers down 7%. Cattle off last week 8% from a year ago, and chicks placed down 1% from same week last year. Less meat makes us more money, makes us smarter and maybe even better looking. Cash US 40 lb. feeder pigs were $136.88 average last week. Have to say we never thought we would ever see prices like this. We expect the high for feeder pigs has been seen with calculations for feeder pigs being purchased soon to be calculated off October lean hog prices 99.30₵ versus August at 121.90₵ almost $50 per head less. That difference will come out of the feeder pig price we expect.
PEDPED has been a real market mover. It cuts supply and drives prices higher. We are concerned that many producers have not only been hit hard by the mortality but many have missed the opportunity of the higher hog prices is because they either sold hogs ahead and/or had bought lean hog futures at prices around $1.00 lean a pound range. Such producer will make money this year but will miss the $100 per head profits that appear to be available through to August. It’s unfortunate for these producers. Many were pushed into price protection by their bankers. Sometimes you wonder if it’s wise to let bankers drive the agenda. By nature they are risk adverse. That’s why they work for a bank. They make loans – they don’t get them. Most producers got ahead by borrowing, taking risk, pushing production, by being entrepreneurial. We feel real sad for producers who have missed a once in a generation profit window.
ExpansionWe believe sow herd expansion is underway. Some empty sow units are getting refilled. New sow barns are being planned and some getting underway. We expect PED will get under control. High prices lead to low prices. Maybe we are raining on the parade but we expect lots of pork being produced in eighteen months. We would suggest putting some money away for the rainy day.
Categorised in: Pork Commentary
This post was written by Genesus