Pork Commentary: Cash Hogs Push Higher03 May 2016
US - Last week U.S Cash Hogs pushed higher for the first time in several weeks reaching 70¢ lean, they had been trading in the mid 60’s. We expect lean hogs to reach 80¢ in the next few weeks.
*U.S year to date Hog Marketings are 38,593,000 down -0.670% from a year ago (-240,000). Not exactly expansion.
*U.S carcass cut-outs were 82.50 last week. Packer margin and cut-out prices are strong when we consider weekly hog marketings around 2,150,000. As market numbers decline seasonally lots of room for higher hog prices.
*A year ago the Chicken price was $107.78 a lb. now it’s $88.75. The lower price for chicken is stopping Chicken production expansion. Both egg-sets and chick placement numbers indicate no expansion.
*Choice beef cut-outs are running $212.05 lb. Pork $82.50. Pork is significantly less expensive then beef. Obviously it’s better to chase the red meat market then the “other” white meat market of chicken.
*U.S ag commodities including Pork are getting price support from the $ decrease of the U.S dollar relative to May currencies. The U.S dollar index earlier this year was over 100 now it’s just over 93. The 6-7% decline makes it cheaper for the foreign buyers to buy U.S pork. This will help export demand.
*Rabobank sees Chinese imports of Pork and by products to increase sharply, reaching 2 million tonnes in 2016. In the first quarter, China imported 480,645 tonnes, (2 million tonnes – ie 22 hogs per tonne= 44 million market hog equivalent per year).
*Chinese piglet price has increased from 17 CNY/HD in Feb 15 to 54 CNY/HD now. Tripling in price. A true reflection of the lower number of pigs from the massive sow culling that happened over the last two years. Chinese hog price will stay high throughout 2016-2017.
*Russia has had a surge in hog prices, last week jumping 10% to $1.05 U.S liveweight a lb. Good time for hog producers in China and Russia.
*Prrs is a scourge. It is rumored that in Nebraska a large Genetic boar production and testing facility has broken with Prrs and all boars went to slaughter (2300 head). Part of the risk and cost of the swine genetic business. Filtered barns sometimes work but not a guarantee of high health. The loss of a huge boar production base certainly is a reality that could set back or strangle any genetic program. It’s why companies like PIC and Genesus don’t compromise health and put primary nucleus boar and gilt production in isolated locations like the Dakota’s and Western Canada. The Swine Genetic industry must be high health or you have no business. There can be no compromise.
*With the USDA projecting 93.6 million acres being planted to corn there will be no shortage if there is no drought. The U.S dollar weakening will give corn prices strength but generally speaking feed costs should stay relatively reasonable.
|Author: Jim Long, President & CEO, Genesus Genetics|
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