Pork Commentary: Hog Industry Benefits from Cattle Supply Plummet

CANADA - The US Hog industry should get a significant boost from the lack of cattle, writes Jim Long.
calendar icon 5 February 2013
clock icon 4 minute read
  • January 1 Cattle Inventory 2013 89.3 million head – 2 per cent lower or 1.5 million head fewer than January 1st 2012 (90.8 Million).
  • The lowest January 1 Cattle Inventory since 1952
  • All cows and heifers 1 January 2013 were 38.5 million down 900,000 from last years. 39.4 million on 1 January.
  • The lowest Cow and Heifer inventory since 1941!

The lowest cattle number in 60 years! The lowest cow and heifer numbers in 70 years! The beef supply continues to plummet with no sign of stabilizing. Less Beef is always positive for Pork Prices. We are the only Red Meat Option.

Wean to Finish Data

Last week we attended the Manitoba Swine Seminars. One of the speakers was Brian Melody PIC Wean –Finish Technical Service Manager, Ames Iowa. Mr. Melody gave a very informative talk. What we found interesting is the actual results he presented on Wean-Finish data.
Database Summary Comparison of Average and High Profit Producers (2010-2012), Brian Melody, PIC
Metric Average Top 25% Difference
Average Selling weight, lb. 267 272 5
Age at Marketing Days 188 188 0
Wean to Finish Mortality 9.6% 7.7% 1.8
Feed Conversion F/G 2.64 2.67 .03
Calorie Conversion 3.975 3.951 .24
Average Selling Price $60.17 $61.53 $1.36
Average return $/hd $160.74 $167.25 $6.51
Feed Ingredient – Cost $/ton $237.74 $234.11 ($3.63)
Margin $/hd (no overhead) $17.60 $33.62 $16.02

We have to say we found it very interesting that PIC’s Mr. Melody’s massive database indicated that the top 25 per cent producers based on profit had wean to finish results over the last three years of 188 days to 272 lbs. and a feed conversion of 2.69 with mortality of 7.7 per cent. What surprises us is how poor these numbers are that Mr. Melody from Pic presented relative to the what we hear the industry believes top 25 per cent results are. We hear often producers claiming 2.3 feed conversions (also genetic companies). Hard to believe .4 better than the top 25 per cent? Also mortality wean to finish claims of 4 per cent when top 25 per cent - 7.7 per cent 188 days to market means half of all producers are over 188 days. Not very spectacular. Lots of room for real industry improvement.

2012 Profit and Loss

Iowa’s State University calculates break-evens monthly and yearly for farrow to finish operations.

December Break-even 73.96 ?/lb. liveweight loss per head $31.54 2012 Annual Break-even 68.16?/lb liveweight loss per head $12.47.

Losing money isn’t good. $31.54 per head December times 10 million market hogs for the month would equal $300 million loss for the industry.

Annual our farmer arithmetic $12.47 per head loss times 120 million market hogs produced would be about $1.4 billion industry losses.

Big loss. Not a good scenario. We continually have a real hard time believing the USDA 1 December Hog & Pigs Report that shows the US sow inventory had expanded. If so we truly have a very resilient industry and very optimistic bankers as it’s hard to believe expansion coming from a negative cash flow.

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