Pork Commentary: USDA June Quarterly Hogs and Pigs Report30 June 2015
US - Last Friday the USDA released the June 1st Quarterly Hogs and Pigs Report, writes Jim Long President – CEO Genesus Inc.
At first glance the June 1 Hogs and Pigs Report is bearish. 4 plus million market hogs in inventory is a daunting number compared to last year. On a 25 week production cycle an average 180,000 more market hogs a week. The current hog cash market is a disappointment. Prices are significantly lower than last year at 48? lean a pound lower or about $100 per head. That is a huge decrease.
Last year we projected that PED had increased market hogs by $30 - $40 per head. We were wrong. Again, looking at current prices it was closer to $100 per head. PED was the most profitable single event in our generation. The in-elastic supply – demand equation is very real in the hog industry.
Are there any positives?
It surprised us that the US breeding herd decreased from March 1st (5,982) to June 1st (5,926). The drop of 56,000 sows was contrary to the belief the US sow herd was increasing. Genesus has been stocking new and empty sow units. We thought we were getting proportional part of an expansion compared to our competitors. Obviously wrong again, we must be getting a larger percentage of new stockings.
The US sow herd on June 1st is up only 40,000 sows from 2 years ago. At this point we see the sow herd numbers will not lead to huge production in 2017.
Market Hog Inventory is up 9% from a year ago, but up only 3% from two years ago. 3% is not a huge number. 2013 we had summer prices in the mid 90’s.
Pig Crop – March – May - This year was 2% higher than 2013 (about 600,000 higher). That’s 40–50,000 more hogs per week this fall. We do not see how an increase at this level will pressure packer space. We reiterate we do not see June 1 breeding inventory which is beginning to set up 2017 production at a level to pressure packer space beyond reasonableness.
Definitely more pigs. Compare inventory to 2014 daunting numbers. Compare to 2013 similar numbers. The real question is why are hogs so much lower today than in 2013 when market numbers were much the same? We can’t explain the price difference of 2015 to 2013 of $50 per head, with a 70,000 hog a week supply difference.
You can read the June 2015 USDA Hogs and Pigs report, here.
|Author: Jim Long, President & CEO, Genesus Genetics|
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