Pork Commentary – Oct 14, 2014 – Observations on the Hog Industry

Pork Commentary

Jim Long President – CEO Genesus Inc.

info@genesus.com October 14, 2014

Observations on the Hog Industry

  • US lean hogs last week were $1.08 per pound; a year ago 94¢- up $30 per head.
  • US 40 pound feeder pigs last week averaged $87.17 a year ago $60.00.
  • US early weans last week averaged $69.43 a year ago they averaged $44.00.
  • A year ago US corn a bushel was $4.69; lasts Friday National US Corn averaged $2.92 a bushel.
  • Our cowboy arithmetic: Pigs are up year over year about $30.00 per head. Corn down over $1.50 a bushel. Feed down about $20.00 per head. $30 up + $20 down = $50 better off for hog producers. The equity hole is being refilled.
  • Last week the US marketed 2,136,000 hogs a year ago same week 2,281,000. We have $1.08 lean hogs with over 2.1 million hogs going to market. June lean futures closed Friday at 95.50. There is almost no way June 2015 will average over 2 million hogs a week. Write it on the wall: June 2015 will be over $1.08 per pound.
  • In July, US Real Per Capita Expenditures for pork was $10.75, and chicken was $10.50. This reflects what consumers are spending. Consumers are voting with their money to spend as much on pork as chicken. In our industry, we are fixated on per capita consumption with chicken selling more tonnage. In our opinion, just as important is what sales are, pork sales exceed chicken. Pork is quite competitive when it comes to how consumers spend their money versus chicken. Pork can command a higher price per pound than chicken.
  • The price of a barrel of oil has decreased $20 since July, down to $84 a barrel. This is putting corn ethanol producers at a slight loss or near breakeven despite a very much lower corn price. Hog producers are making good money. Corn ethanol producers are not. Boo Hoo.
PED PED has ripped through the US swine industry leading to 8 – 9 million dead pigs. Last week the New York Times had an article on PED. The article http://www.nytimes.com/2014/10/10/business/farmers-gain-ground-against-a-deadly-pig-virus.html Obviously the article appears to give hope for some solution to the disease. A Genesus customer has used the MJ Biologic product and have seen a significant reduction in mortality, as the article highlights, some solutions might be at hand. If so expect more hogs coming to market in the future.
  • Next week we are going to China. Genesus is hosting a conference with our nine Chinese genetic production partners at Xian prior to the Leman conference there. The latest statistics from the Chinese Government have the Chinese sow inventory down over 4.5 million in the past year or 10%. In the last 5 months 2.9 million sows out of production or half the US sow herd. Market hogs in China are $1.05 US liveweight a pound, 25₵ higher than the US or $70 per head. ($1.05 is approximately China’s cost of production). At some point this dog will run to the end of the chain. When that happens, China will be looking for pork. The giant sucking sound will be heard in North America and Europe.
 
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