The US-Canada Hog Market continues to face dauntingly negative margins with average losses farrow to finish of $35-$40 per head.

The Facts

  • The average US Base Lean Hogs 53-54% are at 76₵/lb. a year ago same time 86₵/lb. A lower price of $20 per head. A month ago 53-54% lean hogs were 87₵ / lb. Also a drop of $20 per head.
  • Cash Early weans last week averaged $29.30- cash 40lb. feeder pigs averaged $61.66. Both down $20-30 per head from recent highs.
  • Iowa –S. Minnesota Average weights 276.9 lb. latest week, a year ago 276.3 lb.
  • June lean hogs peaked over $1.00 in the first part of December. Last Friday June Lean hogs closed at $89.32. June futures have dropped over $20 head since December.
  • Last week the US marketed 2,203 million hogs – a year ago same week 2.179 million. A few more this year.
  • The US dollar has gained strength versus other foreign currencies, since Feb 1. On February 1st, the US dollar index was 78.915 a measurement of its value against a basket of the world’s currencies. On Thursday the US Dollar Index was 83.180. A 5% gain in just over two weeks making US products (Pork) more expensive for foreign buyers. (e.g. US hogs were $20 per head higher a month ago)
The sum of the above is not pretty. They lead to an industry being challenged by real financial issues. Compound all the above with grain prices that are significantly high historically and you have a cocktail of real challenges. Do we see price relief? Possibly. The liquidation of sows began last July, it takes 10 months for hog numbers to be lower which is this May. Some say there wasn’t liquidation. We believe there was. We also expect the Global Grain Picture should become more livestock friendly in the coming months. South Americas crops are good. The US and the rest of Northern Hemisphere will be planting record acreage for Grain and Oilseeds. The chances of two consecutive years of drought are low. The swine industry needs a break.

China – Dead Pigs

There has been a huge story this past week about dead pigs floating in a river by Shanghai. We were in New York City this past week and it was a major story on both TV and Newspapers there. It was reported, part of the reason could be China clamping down on pigs dying from disease from being used for food. This leads to river disposal? All seems quite bizarre. One of the people we work with called it “Porcine Aquaculture”. Its interesting how such a story catches Global attention. Make Large New York Funds looking a funding of swine project in emerging markets nervous. All we ca say is, if this makes you nervous best not get in the Pig business. The Pig business is not for the faint hearted or the non-committed, but it might lead you to become committed in another context.

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This post was written by Genesus