Pork Commentary: June Lean Hogs $103.3018 June 2013
US - June Lean Hog futures last Friday closed at $103.30 making a big run from $88 at the end of March (about $30 per head improvement), writes Jim Long.
We had and have been quite aggressive on lean hog prices surging to over $1.00 for several months. We believed the US sow herd had liquidated last summer. The USDA reports have not reflected liquidation. Despite this we still believed there would be fewer hogs than the USDA indicated.
- The March-May barrow-gilt harvest has been up 0.9 per cent. The USDA projected 2.2 per cent. Fewer hogs stronger prices.
- The US sow harvest March-May - up 4.3 per cent year over year. Losing $30 per head as was happening is not conducive to maintaining sow inventory, let only leading to net expansion.
- Another positive note for continued strong prices is that the US National Base Carcass weights are consistently running 1.5-2 lbs. lighter than last year. The lighter weights are despite cooler temperatures than a year ago over the last six weeks. The combination of lighter carcass weights in the face of year over year cooler temperatures indicates the inventory is more current than last year. Bullish near term hog prices.
- Last week the USDA reported that some lean hogs traded over $1.10 lean a lb. A true reflection of marketing, supply and demand.
PED and its subsequent damage appears to be hitting the US industry with some vengeance. Acting like TGE, it is ripping farrowing barns with losses from 3 to 5 weeks of production. There is also many subsequent junk pigs at light weight ranges.
This past week we learned of some large production systems being caught by PED. The pigs that are dying are in the November-December marketing zone. There will definitely be less hogs in that period.
Last week we indicated good seasonal demand for small pigs and that we were told there were empty finishing barns. We expect PED will not only create more empty finishing spaces, but be a catalyst for stronger small pig prices as producers purchase to fill PED induced supply holes.
Lean Hog prices are touching record highs, the US Hog Harvest March-May significantly lower than USDA inventory expected, hog weights lower year over year, PED ripping production lower, US sow marketings higher year over year. The USDA is still projecting more pork year over year. (+0.07 per cent). We don’t see it. There will less pork produced.
|Author: Jim Long, President & CEO, Genesus Genetics|
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