Pork Commentary: Price Gain Reported in US Hog Market09 September 2014
US - The US hog market gained in price strength this past week with October Lean Hogs on the CME up $7.50; on Friday Cash lean hogs were 98¢ per pound, a year ago 90¢ per pound, reports Jim Long in this week's "Pork Commentary".
In the coming weeks we suspect lean hogs will hover in the mid 90’s to $1.05. The big question: will hogs get heavier weights as they usually do seasonally? How heavy can hogs get this fall? Right now national lean hogs are averaging 213 pounds a year ago 205 pounds. How high will we go this fall 220 pounds? If we can keep weights down it would be price supportive in cutting pork tonnage.
Sow Herd Expansion
We are not picking up any significant number of new sow barns being built. Why? 35 – 40 per cent cash needed to finance. PED and hedging limited profits. PED creates crisis climate. Size of barns to build take more capital. 2,500 farrow to wean barn would be $7 – 7.5 million new, stocked, and to get production income, and permitting issues. All the above plus more keeping a lid on things so far.
Some empty existing sow units have been restocked in USA and Canada. We believe there are between 25 – 30,000 sows in this category.
We also believe there will be a push to make sure existing sow barns are running at full inventory. This will lead to more pigs in the future.
It appears PED has slowed down but it certainly hasn’t gone away. Some producers are having trouble getting it under control and are having re-breaks. In the coming few months as we get to colder weather we will all find out if it is somewhat under control or come back with a vengeance. We doubt if anyone knows for sure.
Choice Genetics Non Investor
One of our Genetic competitors Choice Genetics was successful in finding an investor to maybe take them out of bankruptcy. All depends if there Chapter 11 reorganization case is approved.
If approved Choice Genetics will be owned by Groupe Grimaud of France and Ningbo Tech Bank of China. The next step to try to re-build a brand encumbered by the bankruptcy association. The French – Chinese ownership continues a trend of Asian and/or European ownership in America’s Swine Genetic Industry.
|TOPIGS - NORSVIN||Holland - Norway|
|Choice Genetics||France - China?|
Genesus is now the only North American owned Global Swine Genetics Company. Interesting dynamics but at the end of the day, all producers must buy genetics from the company that will give them the most value and profit. Where the corporation is owned is irrelevant if it doesn’t deliver results.
Last Thursday the average cash US corn price a bushel was $3.21, the lowest in four years. We were in the US Mid-West last week and the corn in the fields we saw looked exceptional. Cash corn last week in North Dakota/Minnesota was $2.57 a bushel. We already have cheaper feed than a year ago and there’s a real good chance it could get cheaper yet. We suspect farmland prices have reached their peak after being driven higher by record grain prices.
Hog market is showing some rebound. Feed prices continue to decline. No matter how you figure it there will be no major increase (other than seasonal) of beef, or pork over the coming months. Hog prices and profits should remain historically very good.
|Author: Jim Long, President & CEO, Genesus Genetics|
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