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Pork Commentary: June Lean Hogs Surge Past 80 Cents

by 5m Editor
3 March 2010, at 9:33am

CANADA - This week's North American Pork Commentary from Jim Long.

On 6 August, June lean hog prices were $65.50 on the Chicago Mercantile Exchange. 1 February this year, June was $74.65, last Friday, 26 February, June lean hogs closed at $81.40. This is an increase of about $30.00 per head since August, and about $12.00 per head in the month of February. Lean hog futures going higher is a belief by traders that pork demand is getting stronger from the lows of the summer that were at the time being hammered by H1N1 and the concern for the domestic and global economy. Couple this with the realization of 4 million fewer market hogs in the USA – Canada inventory compared to 1 January 2008 – is there any wonder lean hog futures are moving higher?

Cash hogs are also tracking higher with Iowa – Minnesota lean hog prices Friday at 69.97. This is up over $10.00 per head from the previous Friday. Higher Futures = higher lean hog prices. We need it! Two and a half years of hell is enough.

Storage

Pork in storage on 31 January this year was 495 million pounds down 110 million pounds from a year ago. This is a reflection of supply and demand. Last year, on 31 January, combined poultry, beef, and pork in cold storage was 2.210 million pounds, this year 1.8454 million pounds. This is a decline year over year of about 350 million pounds or the equivalency of 5,000 trailers of meat less in storage. (35 tons per trailer). This lower supply means the market is closer to the bone. More hand to mouth. As pork supply drops over the coming months lower cold storage levels allow for higher prices.

Feeder Pigs

In August last summer, feeder pigs were just over $10.00 each. Last week cash feeder pigs averaged $67.61(40 pound) according to the USDA. Last Friday the DTN livestock margin for market hogs indicates you can pay $71.95 for a 45 pound feeder pig (2 July – 260 pounds). A 260 pound hog on 2 July using lean hog futures equals $159.88. This is a heck of a lot better than what we have had.

Brazil

World markets affect where our own hog market is going. Last Friday we were speaking to the Genesus representative in Brazil, Martin Riordan. Martin reports that Brazil’s hog price has jumped in the last couple of weeks to 2.25 Reals per kilo or 56 cents per US pound live weight. These are the highest hog prices in Brazil since the summer of 2008. Brazilian producers like North America have lost significant money over the last 2.5 years. Brazil is a major exporter of pork with over half of its pork production exported. The surge in hog price reflects Brazil’s and the world’s supply and demand. Just as higher prices in North America support Brazil’s pork price due to export competition. It’s vice versa – higher prices in Brazil supports North America’s hog prices.

The corn harvest in Brazil has been a bumper crop. Last Friday in the south of Brazil where much of the livestock and poultry is produced corn was $146.00 per tonne or about US$3.56 per bushel. In the interior, Mato Grosso corn coul be as low as $3.00 a bushel. Brazil’s soybean harvest is just beginning but there are expectations for a bumdper crop.

Russia

We had Russian producers visit us last week. Hog prices in Russia continue to be strong with producers receiving approximately US$1.00 per pound live weight. We were told early wean pigs are fetching $85 - $90 US each. Feed prices are similar to North America. We have read reports where pork trade between USA – Russia might become easier. It doesn’t take a super pork salesman to buy pork in North America and make a profit in Russia.

Sow Prices

The sow price has surged. Sow marketing’s have dropped 15 per cent since the fall (65,000 – 55,000). At the end of last week 450 – 500 pound sows were 61.60 cents per pound up from a year ago, 49.73 cents per pound. Sows 550 pounds and up were 66.71 cents per pound last week. This is up from last year’s 55.12 cents per pound. Sows are double in price compared to last summer. A 550 pound sow can bring $370. The producer’s that kept old sows rather than selling them now have the opportunity to sell the sow and replace them with genetically improved gilts and have money left over. As market hog prices move closer to 80 cents, we believe that this will continue to support sow prices.

June lean hog prices reached over 80 cents lean. Last week cash lean hogs touched 70 cents – up $40.00 per head since August. Demand is stronger supply is dropping with 4 million fewer hogs in inventory compared to 1 June 2008. There is less pork, less beef, and less poultry in storage. Other global hog prices are increasing or staying strong. The last 2.5 years have been hell. H1N1 (swine flu) is gone and the domestic and global economies are getting stronger. In the next few months less hogs coupled with increased demand could push lean hogs to 90 cents.

GENESUS DUROC BOARS

Setting New Genetic Standards

Genesus Duroc Boars are selected from the World’s largest High Health Registered Purebred Herd. Genesus Durocs are selected for rapid growth rate, durability, feed conversion and carcass quality. Genesus Durocs are analysed using a proprietary carcass program that emphasises lean meat percentage while complementing selection for intramuscular fat, color and tenderness. All characteristics demanded by the Premium White Tablecloth and Export Markets, Genesus Duroc have been recognised for superiority with several National Genetic and Packer Carcass Awards. Our selection process is extensive.

Rapid growth – Genesus has the industry’s only dedicated Registered Purebred Duroc performance testing facility that uses computer transponders to individually measure average daily feed intake. This allows Genesus to identify High Appetite Boars that grow faster and are robust throughout production. Research has estimated that including individual feed intake measurements taken over the complete grow-finish period will increase the expected response to selection in our sire line index by 43 per cent. A key selection tool in the Genesus genetic program by our geneticists is the Sire Line Index (SLI). The SLI combines EBV (Estimated Breeding Value) for the key economic traits into one value based on their relative economic value for traits important to slaughter hogs. Last year Genesus performance tested 5.014 Durocs. Genesus has made steady, annual progress in the key economic traits.

Feed Conversion – Genesus genetic improvement programs have always included selection for feed conversion ratio (FCR). Our selection indexes have a significant amount of emphasis on FCR: 29 per cent in the Sire Line Index. In our current evaluation system an EVB for FCR is computed based on the relationships between FCR and age. Lean yield, loin eye area and percentage of lean in the loin relative to 3 primal lean. Most experts agree that feed intake is strongly related to growth rate and fatness. A 1993 study determined that one day less to 220 lb resulted in 1.96 lb less feed and for every .04 inches less fat at 220 lb resulted in 2.34 lb less feed from 55 to 220 lb growth period.

Use of Carcass and Meat Quality Data

Carcass and meat quality data is combined with off-test data (growth and ultrasound), pedigree data and off-test, carcass and meat quality data on sibs and relatives for genetic evaluation. Currently Estimated Breeding Values are computed on a weekly basis for the following carcass and meat quality traits:

  • Loin depth
  • Loin depth
  • Fat depth
  • Loin marbling score
  • Loin eye area
  • Loin pH
  • Lean yield
  • Loin Minolta L reflectance

This data collection has enabled Genesus geneticists to accelerate superior carcass quality traits. Packers recognise Genesus Durocs Quality and Uniformity and this leads to our customers having hogs with market options and demand.

Structure – Over the last decade tens of thousands of Genesus Durocs have been tested annually on cement slats in a real life environment. The ability for Genesus Durocs to breed and produce offspring that perform in commercial facilities is well recognised in our industry and by our customers.

Health– All Genesus Duroc boars come from our Primary Nucleus Units. Genesus Duroc Boars health meets and exceeds industry standards. Our seven dedicated AI centers have excellent health and biosecurity.

Registered Purebred Durocs – Many genetic companies sell what they call Durocs. Genesus sells only Registered Purebred Durocs from 100 per cent registered purebred herds. Genesus currently has the world’s largest Registered Purebred Herd. Last year Genesus registered 41 per cent of all Purebred Breeding Stock in the nation. You can be confident you are getting a 100 per cent Duroc boar with Genesus, verifiable by the official National Purebred Swine Registry.

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