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Pork Commentary: Lean Hog Futures Increase Despite Negative Hogs and Pigs Report

03 January 2017
Jim Long on ThePigSite

Jim Long is President &
CEO of Genesus Genetics.

US - After last weeks December Hogs and Pigs Report that indicated the US breeding herd and Market hog & inventories were up beyond any expectation year over year (Breeding +1 per cent - Market +4 per cent), it is surprising that lean hog futures went up over $2.00 this past week, writes Jim Long President – CEO Genesus Inc.

This market continues to amaze us. The relentless amount of pork going to market relative to anytime in history and US pork cut-outs are at an astounding 82¢ lb. We don’t believe there is anyone who would have predicted US pork at 82¢ when every US slaughter plant is running at maximum (443,000 per day). The pork demand that we are seeing is an indication of excellent retail, foodservice and export markets. It augers well for the coming year in 2017 as hog supply declines seasonally and new US slaughter plants come on line.

Productivity

Productivity and efficiency are huge factors in our profitability as our industry is a commodity business. There is a myth we believe on what people produce per sow per year. There are some numbers that hit home with the true reality of our industries productivity.

To look at USA-Canada total productivity we have to add USA-Canada hog slaughter numbers together. This will compensate for the small pigs and market hogs that come from Canada then we will divide this by USA-Canada combined breeding herd of December 1, 2015, we pick a year ago as the date to compensate for life cycle of pig production.

 

* Estimated last 2 weeks 2016

137,818 ÷ 7,242 = 19.03 hogs marketed per breeding animal

19.03 hogs marketed per breeding animal is a very close estimate of productivity of USA-Canada’s swine industry. It’s not 25 or even 20. It’s a true reflection of the reality of our industry. An average means half of our producers are below 19. We are not a statistician but if we bell curved from 19 there would be very few over 25 pigs per sow. How many below 15? Half of US production is produced by the top 25 largest entities, how can they on average be much different then 19.

Canada

Lets try some other number games. Canada will export about 5.5 million small pigs and market hogs in 2016. Lets add that too Canada’s own market hogs and divide by breeding herd.

Canada Divide 25,952 ÷ 1240 = 20.92 pigs.

Obviously the 20.92 numbers is higher compared to 19.03. Some of it is small pigs that will die before they reach market.

Now lets do the same calculation for USA subtracting all pigs imported from Canada from USA slaughter total and then divide by US breeding herd.

USA divide 111,866 by 6,002 = 18.63 pigs per breeding animal.

Are Canadian producers 3 pigs per breeding animal better then US producers? Maybe, have some observations from selling swine genetics both sides of border.

  • Canadians tend to stay committed to using true F-1 females in production which enhances productivity
  • Canada use of more Duroc boars in production leading to lower total mortality.
  • In general health of Canada herds is better
  • Canada has a higher proportion of production owned and operated by individuals that go into there own barns
  • In general Canadian nutrition focuses on performance not least cost. Less DGG’s used in Canada.
  • The enormous pressure in Canada from Country of Origin labeling had forced Canadians to get better or die

In general we observe average production in Canada better then US. Obviously the numbers re extrapolated and some could argue with the format. They are also averages of country. In the US there are many excellent producers. In Canada there are also poor ones. The main point of this exercise is to give a rough snapshot of true productivity. Next time you hear coffee shop talk of 25 hogs marketed with no offer of data to back up. Remember the average. The bell curve. Its why at Genesus we show real results from real farms, with actual customers names. Not the crap of Farm A, Farm B fantasies. There are real top producers many of us can learn from what they do.

It’s a New Year. Herby resolve to use all available technology and knowledge to get better. With the seemingly excellent pork demand we are experiencing and new slaughter coming on line it should be a profitable year. Have a safe and prosperous New Year.

“Ring out the false, ring in the true” -Alfred Lord Tennyson

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.

Top image via Shutterstock



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