ThePigSite.com - news, features, articles and disease information for the swine industry

News

Pork Commentary: China’s Swine Sector Continues to Liquidate

07 May 2015
Jim Long on ThePigSite

Jim Long is President &
CEO of Genesus Genetics.

CHINA - The Chinese Ministry of Agriculture’s Swine March Inventory Report indicates a decline of 700,000 sows in the last month.

In the first three months of 2015, Chinese Government data indicates 2.5 million sows have been eliminated. In the last 12 months, 7.5 million sows have been liquidated, bringing the Chinese Sow Inventory to 40.425 million sows. It’s a continuing unprecedented decline in China’s production capacity, and with 700,000 more gone last month a scenario that is far from over.

The Hog Market Inventory on March 01, 2015 was 389.93 million, down 40 million from the same time a year ago. If it takes 25 weeks for a hog to go from birth to market that is an average of 1.6 million fewer hogs per week coming to slaughter over the next 6 months. That’s a heck of a lot less pork available and with the sow herd liquidation ongoing there will be even fewer hogs to go to market in 2016.

China’s hog prices are about 95c USD a pound liveweight that is currently up about 5c a pound this past month. The challenge for Chinese producers is Corn at $10 USD a bushel, Soybean meal $550 USD a ton, lots of diseases, and low productivity. Truth is 95c US liveweight a pound or over $200 per market hog is near breakeven or for many, losses.

We have been writing for several months that China will at some point be down 2 million hogs per week (give or take total US slaughter per week). We are getting closer. We believe that the equivalent of 100,000 hogs a week exported from the US to China is a market mover. Same scenario for EU countries. It will happen, capitalism is alive and well; pork will move at unprecedented levels to China. It’s already started and like a snowball going down a hill will just have to continue to get bigger.

Cash Market

The US hog price continues its relentless increase. On Friday, Iowa – Minnesota averaged 74.94c lean a pound up 6c on the week. Since the release of the March 1 Hogs and Pigs Report on March 27 lean hog months have gained 6 cents a pound.

Observations

  • US National Daily Base Lean Hog weights a year ago were 219.84 pounds. This past week lean hog weights were 6 pounds lighter at 213.9. 6 pounds is about 8 pounds liveweight. If we use 2 pounds gain per day, that’s 4 days production, or about 1 million hogs pulled ahead this year compared to last year. The US has marketed about 2 million more hogs this year compared to last or a 5.6 per cent increase. Take one million out due to pull ahead, it moves year over year marketings to 2.8 per cent . The USDA December 1 Hog Inventory Report indicated a 2 per cent increase year over year in market inventory. They are the Pigs we marketed year to date.

  • Maybe it is convoluted Farmer Arithmetic but we believe that US Inventory as of December 1 of a 2 per cent increase was correct. The year to date hog marketing difference of over 5 per cent more is due to pulling weights down and pushing marketings ahead.

  • The March 1, 2015 Market Inventory is similar to 2013’s. In the summer of 2013 lean hogs were in the mid-90s. We continue to believe that’s where this market is going. Why? More pork to China, high beef prices, stronger US economy, more people, but most importantly we see no overriding conditions that will slow the US pork prices to reach 2013 levels this summer. We know we are way out there with our thoughts. The Ag – economists have predicted 70-74? per pound this summer. We point out we are already at 74? and the seasonal decline in hog marketings just started.

Hang On – Yippee – Yi – Yo – this is going to be interesting!

 

Author: Jim Long, President & CEO, Genesus Genetics

To find out more about Genesus Genetics,
please take the time to visit their website at
www.genesus.com.

The opinions expressed in this commentary are entirely those of the author and can not taken to represent the views of ThePigSite.com, its owners or its management.



Share This

News By

Related News

USA Hog Market

News from United States  24 November 2016

More News

Mexico Hog Market

News from Mexico   09 December 2016

EU Weaner Prices Hold Firm

News from European Union   09 December 2016

Our Sponsors

Partners


Seasonal Picks

The Commuter Pig Keeper - 5m Books