Lower Corn plus Higher Hogs Equal Good WeekThis past week hog producers caught several breaks. It’s about time! The list of breaks follows. *A week ago last Friday U.S. lean hogs 53 – 54% averaged $91.27 a lb. A week later they were $94.87. That is a bump up of $7.00 per head. *July corn hit $7.99 a bushel on July 10 a week later June 17, last Friday July corn closed at $7.00 per bushel. That is a $1.00 a bushel decline which is about an $8.00 per head saving on cost of production. Higher hogs lower corn all good news for hog producers. *The latest Iowa – S. Minnesota market hog weights are 268.6 pounds live weight down 2.1 pounds from the week before and 2.4 pounds (271) from a year ago. This is real positive news. For months Iowa – S. Minnesota weights had been 5 pounds higher year over year. Now 2.4 pounds lower means hogs are more current, market hog inventory is down and packers will have to bid up to get hogs – which they are. *Last week’s U.S. hog marketing’s were 1.973 million head down about 30,000 from the same week a year ago. Lower hog numbers and lower hog weights mean less pork. *Chicken producers are blinking after expanding with egg sets and production running 3% higher than a year ago. The chicken coop boys are now down 3% on egg sets. They deserve their red ink. Corn has doubled in price and they expanded. With 12 city chicken broilers 83.36 cents per pound versus 86.80 cents per pound a year ago. Allen Family Foods who produces 2 million birds a week filed chapter 11 bankruptcy on June 11. What do you expect in an industry that expanded in the face of high feed prices and no price increase for chicken? Red ink! *Big move in the cattle market last week with June live cattle up 7.03 or about $80 per head. Every dollar cattle go up in price there is more support for higher hog prices. *We expect cash early weans at a $17.77 average and 40 pound cash feeder pigs at $41.51 average are at a seasonal low. Over the coming weeks we expect lower feed prices and higher lean hog futures will pull prices higher. *Pork exports are going to stay strong. China’s live hog prices hit record highs last week reaching $1.22 U.S. live weight a pound ($2.69 kilo). Prices that high mean China’s supply of pork is down and demand is strong. We expect greater pork exports to China and Hong Kong (gateway to China) in the next few months. High feed prices will dampen any Chinese expansion plans. *South Korean demand for imported pork should stay strong for the next year. Market hogs are over $500 U.S. per head. Foot and Mouth Disease eliminated 350,000 sows and their production. It will take a couple of years for South Korea’s industry to recover. *Global demand for pork has pushed U.S. prices to record levels. We expect in the coming week’s further price increases as the supply chain of hogs gets even more current.
Corn Ethanol Loses Key Senate VoteLast Thursday the U.S. senate voted 73 – 27 to immediately end the 45 cent Volumetric Ethanol Excise Tax Credit and the 54 cent import tariff. Further votes by the House of Representatives are needed to get this finished.
To say corn ethanol as a favoured child of politicians and environmentalists is over is not an exaggeration. Soon they will have their mandated usage under assault. The whole moral, social, and economic foolishness of corn ethanol will continue to erode corn ethanol support. As livestock producers having a level playing field with ethanol producers is imperative. 73 – 27 was the Senate vote, that’s a big difference. Probably Corn Ethanol plant shares have seen their historical highs.
Categorised in: Pork Commentary
This post was written by Genesus