Prices Continue to Climb

Iowa – Minnesota lean hog price last Friday averaged 82.42 ¢ lean per pound.  This is up from the previous week’s $79.91 ¢.  A year ago 51–52% lean hogs were 59.58 ¢.  We are now $40 per head more than a year ago.  Last week the highest net lots of hogs (including premiums) reached $91.46.  Did someone say 90 cent hogs?  Last week the U.S. marketed 2.028 million head.  It’s just a matter of time before we go below 2 million head a week.  Hog supply is going to continue to decline.  It is amazing that in April lean hogs are in the $80’s, a tremendous reflection of demand relative to supply.  Last August we saw 90 cent hogs coming; now we won’t be surprised if some hogs are $1.00 per pound before the summer is over. Other Observations
  • Last week Stats Canada released Canada’s Swine Inventory as of April 1st.
  • Canada’s breeding herd has gone down from 1.570 million on April 1, 2007 to 1.303 million on April 1, 2010.  That is a decline of 267,000 or 17%.  The market inventory in the same time period went from 14.729 million to 11.635 million.  That is a decline of about 3.1 million head.
  • The devastating financial losses the Canadian industry has had over the last few years has in our opinion permanently downsized the production capacity of Canada.  We don’t expect to see any real growth of production for many years.
Lest we forget:
  • A reader sent us a copy of the lean hog predictions that were given by Paragon Economics Inc (Meyer) at the Minnesota Pork Congress in January.
2010 Missouri (Plain) LMIC Meyer (Paragon)
Q1 59-63 56-59 58-62
Q2 63-67 61-64 68-72
Q3 66-70 65-68 66-70
Q4 61-62 63-67 60-64
Year 62-66 61-65 63-67
We are in Quarter 2.  The economist experts collectively predicted a market in the 60s.  They were not even close!  For quarter 3 2010 the wizards were calling for high 60s.  Currently, lean hog futures are about 86 cents.  The sad part is there were producers who were pressured by their lenders to hedge based on these wrong predictions.  They will have got margin calls and had lost opportunities.  We hear of too many stories of producers  who hedged or sold ahead at prices $30 – 40 per head lower than today.  They are breaking even when they could have been backfilling  the huge equity hole created in the last three years.
  • Observation: Beware of continual Hedge Suggestions by economists sponsored and paid for by Chicago Mercantile Exchange (CME) The CME makes money on trades and suckers.  My late friend Doug Maus called the CME Las Vegas with no rules.
Summary Lean hog prices and lean hog futures continue to show strength.  Hog marketing’s will decline with Canada’s hog numbers continuing to fall.  It is good to see profits.  The pain of the last three years needs to be relieved. Thankfully with almost 70 million hogs in USA-Canada inventory gain of over $2.5 billion. That will help backfill the equity hole.

Genesus Domination

Swine Management Services

Swine Management Services (SMS) of Fremont, Nebraska is the world’s largest swine benchmarking service. Genesus has participated in SMS Benchmarking since 2006 as the Service has grown from 380 farms with 722,417 females to its present 2009 level of 683 farms with 1,215,511 females. Genesus has grown along with SMS but one thing remains consistent, our domination of the results with, 8 of top 10 farms for all four years and 9 to 15 of the top 20 over the same period. Genesus believes like many successful, industry leading companies that the only way you improve, get to the top and stay on top is by relentless benchmarking. We invite you to participate and consider our results.

SMS Genesus Performance Data

(January 1st 2006 – December 31st 2009)

Year 2006 2007 2008 2009
No. of SMS Farms 380 467 585 683
No. of SMS Females 683,570 839,998 1,106,344 1,188,626
No. of Genesus Farms 30 44 49 51
No. of Genesus Females 24,725 31,407 38,596 42,399
SMS Top 10% SMS 27.20 27.12 27.31 27.62
Genesus Top 10% 29.45 29.97 29.71 30.06
SMS Average All 22.58 22.94 23.30 23.80
Genesus Average All 26.41 26.55 26.78 26.82
SMS Bottom 25% 18.98 18.82 19.72 20.16
Genesus Bottom 25% 24.89 25.17 25.19 25.26
Genesus Herds in Top 10 8 8 8 8
Genesus Herds in Top 20 9 14 15 13
All genetic companies are represented in the SMS database.  The facts are indisputable; Genesus is the number one female, with consistent, significant, dominant performance four years running. Isn’t it time you moved up to the Genesus Advantage?

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