Pork Commentary

Jim Long President – CEO Genesus Inc.


April 28, 2014

March Pork Production and Cold Storage Lower US pork production of 1.85 billion pounds was down 4% in March compared to last year. Hog slaughter was down 7% from March 2013. The average live weight was up 8 pounds from the previous year at 285 pounds. Beef production at 1.94 billion pounds, was 5% below the previous year. The combined Pork and Beef production in March was about 171 million pounds. That is equivalent to approximately 8500 tractor trailers of meat or about 13 miles of tractor trailers lined up. Is it any wonder pork and beef prices are as strong as they are? Current hog prices are $75 per head higher than a year ago. If everyone is on cash like market the industry should be receiving approximately $150 million a week greater revenue year over year. The equity hole created over the last few years is getting back filled quickly. Pork in Storage US Pork in storage May 31 was 575 million pounds down 79 million pounds from the previous month. A year ago pork in storage was 647 million pounds. It’s no surprise collapsing storage numbers, why would pork go in storage in March with hog prices near historical highs. We expect pork in storage will reach a historical low in the coming months, a reflection of very high hog prices. Market Hogs Last week’s US hog marketings were 1,999,000 down 146,000 from the same week a year ago. Cattle were down 40,000 head year over year. The red meat supply continues to be significantly below last year. We expect week upon week going forward of less red meat will test historical retail price highs. Cash Early Weans and Feeder Pigs US cash early weans and feeder pigs are beginning to see seasonal weakness. Cash feeder pigs dropped $7.00 last week but still averaged $129.14. Truly a case of lower still meaning extremely high prices. A year ago cash feeder pigs were $58.00. As we say weakness is relative, cash feeder pigs are a whopping $71 per head higher than a year ago! Christmas in April for feeder pig sellers.  Cash early weans last week averaged $80.10. Sows 500 pound plus sows averaged over $1.00 a pound last week! $500 plus for a sow, unbelievable! No reason to hang on to old sows. Send them to town, buy a gift and put the difference in your pocket. It’s a smart and easy play. Expansion We see gilts going in. Expansion has started. Empty units getting restocked and new sow barns getting started. We have 18 months of good prices after that? Now is the time to pay debts, improve your technology and productivity. A plus for North American producers, China producers have been losing money, we expect major liquidation going on there. In the future China due to liquidation will be looking for pork and should support our prices. Short term we believe PED has hit over 50% – 60% of US sow herd (i.e.) 3 million – 3.5 million sows. A loss of 6-8 million pigs. We are having the greatest profits ever. A once in a generation happening. Ride it, enjoy it. When people say “This time will be different.” Don’t believe it.

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This post was written by Genesus