October and December 2010 Lean Hog Contract reach New HighsLast Friday October lean hog contracts at 77.025 and December at 74.350 closed from what we can determine were life of contract highs. Certainly some producers will look at these levels as good selling opportunities. Last week 53 – 54% lean hogs were averaging nationally 80.32; a year ago they were averaging 60.76. That is 20 cents higher this year ($40 per head). Cheques are certainly bigger! Everyone needs it. Last week’s U.S. Hog Marketing’s were 1.961 million down. 68,000 head from the same week a year ago. Less hogs, no H1N1 (swine flu), and better demand is leading to the $40 per head difference. Other Observations
- Last week National Direct Cash early weans averaged $42.92 – 40 pound feeder pigs $61.41. Demand is good for small pigs and prices are counter – seasonally strong. What is interesting is reports that we are hearing of reluctance of buyers to sign long term contracts. The reality of the losses in the last three years and the price volatility of both grains and hogs have made long term commitments a nervous proposition.
- September CBOT corn a bushel dropped to $3.71 a bushel last Friday down 24 cents a bushel in a week. Crops look excellent in most areas. This significant lower year over year pork in storage bodes well for hog prices in the coming weeks. August lean hog futures of 83 cents plus are not an aberration.
- U.S. retail pork prices hit record highs in June at $3.14 per pound. Consumers are definitely wanting our product this is a great sign of demand. We have producers making money, packers making money, and consumers voting with their dollars to buy our pork all positive.
- U.S. May Pork Exports were up 22% in May over a year ago. This has helped push U.S. hog prices up year over year $40 per head we have seen in the last three months. When it’s raining enough that lawns don’t need watering at the end of July. Enough moisture for crops is not an issue. Read this week that corn is $2.20 U.S. per bushel in some parts of Brazil. That doesn’t work for corn growers. There is no corn ethanol in Brazil. Cheap feed for livestock and poultry though.
- The U.S.D.A. released July 1st Cattle and Calve Inventory last week. The total cattle and calves were 100,800 million – down 1.2 million head from the year before. Cattle numbers continue to decline year upon year. Less cattle creates Red Meat substitution opportunities for pork.
- U.S. pork in storage at the end of June was 410 million pounds, down 167 million pounds from a year ago and down 36 million pounds from the end of May.
- Compared to 1950 the U.S. produces 176% more pork with 44% fewer sows.
- Compared to 1930 U.S.A. produces 333% more corn on 11% more acres.
- Compared to 1930 69% more wheat on 6% fewer acres.
Categorised in: Pork Commentary
This post was written by Genesus