Pork Commentary: US Lean Hog Price Races Higher12 May 2015
US - The US hog price is racing higher. A month ago, lean hogs averaged 59.76¢ a lb. Last Friday Iowa – S. Minnesota lean hogs averaged 79.17, 20¢ a lb. increase in four weeks. More than $40.00 per head. We expect this relentless trend will continue over the next few weeks with lean hogs reaching .95¢ a lb. or more, writes Jim Long President – CEO Genesus Inc.
- March US pork exports to the world were 440 million pounds, the largest monthly total in the last year. In January during the height of the Pacific coast shipping issues, US world pork exports were 347 million pounds.
- We expect exports will continue to grow as the demand for pork accelerates, reaching beyond 500 million pounds per month. Exports will be led by Mexico, Korea, Japan and China.
- Below is a picture taken last week in a Beijing train station. It’s a display advertising American Pork – Virginia Sausage and Hams. Ad is from Smithfield parent company. American Pork, a premium product. It is not if, but when American Pork goes to China at huge levels. Smithfield being Chinese owned is pounding the beachhead.
- U.S. pork cut-outs are 79.57¢/lb., at that price and market hogs 79.17¢/lb. there is no packer margin. We expect that pork exports did processing margins that are not reflected in the U.S. pork cut-outs must be good as packers have pushed lean hog prices higher.
- Market hog weights continue to decline, last year this week, lean hog carcasses averaged 219.61 lbs. Currently lean hog carcasses are 213 lbs. Not only less pork per carcass but also a reflection of hogs pulled ahead this year. This will support lean hog prices in the coming weeks. You only kill them once.
- The US dollar index has devalued almost five per cent in the last month, lowering US pork costs to importers in most countries
- US pork cut-outs at 79.57¢/lb. pale to US beef cut-outs at $2.58/lb. Pork is either a great deal for consumers and/or big margin maker for retailers. We believe pork and beef cut-outs will narrow, meaning to us pork cut-outs are going higher. The reason – beef supply not there, beef price will hold. As summer seasonal supply of pork declines and exports increase, we expect pork cut-outs to move over $1.00.
- Avian Flu – Latest US data to indicate 25 million chickens and turkeys have been exterminated due to Avian Flu. Looks like it is far from under control? If Avian Flu gets in the broiler and turkey breeder flocks all bets off on chicken and turkey supply. Avian Flu makes PED look like a common cold.
Prices are racing higher. Over $40 per head gain the last four weeks. We expect the trend to continue with lean hogs reaching .95¢/lb. plus, pushed by seasonally lower hog numbers, stronger pork exports and high beef prices.
|Author: Jim Long, President & CEO, Genesus Genetics|
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