Pork Commentary: Red Hot Early Wean, Feeder Pig Market

US - Red Hot – We have never seen anything like what’s happening. US Cash Early Wean Pigs averaged $83.65 per pig last week (73-89) while Cash 40 lb. feeder pigs averaged $90.12 (80-95.50). They just seem to be going up and up, writes Jim Long.
calendar icon 24 December 2013
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We expect cash feeder pigs to reach more than $100 in a few weeks. A year ago Cash Early Weans were about $55 and feeder pigs around $65. That $25-30 per pig difference year over year is all margin for small pig producers. Assuming it costs $35 to produce an early weans. There’s a $50 per head profit for a business that most of the time thinks $5 all the time is good.

The Cash Small Pig Market is a true reflection of current supply and demand. Supply is down. First because there has been no sow herd expansion, second PED is killing probably millions of small pigs creating empty finisher barns that have ongoing overhead costs.

We are all farmers and we can’t stand empty barns. Currently there are more barn spaces than pigs to fill them. It’s partially the reason slaughter weights have gone up. There are no small pigs looking for the space so might as well them a bit longer to gain weight. Do the prices for small pigs make any sense for buyers? It’s in the eye of the beholder.

Feed prices have dropped year over year $30 so that lowers finishers costs. Second markets might be real but they are not necessarily rationale. Cattle lose money most of the time but somehow there are people who want to keep doing it. Is $15,000 acre land rationale when corn costs $4.10 a bushel to produce? Lots of smart people feed cattle and are buying $15,000 an acre land. We believe cash lean hogs will reach $1.10 this summer. If we are right at the end of the day both small pig producers and finishers will make money.


"It is an immutable law in business that words are words, explanations are explanations, promises are promises – but only performance is reality"
Harold Geneen

Year to date the US has marketed 109.564 million market hogs. There is 11 days to go. We expect about 3 million more hogs to come this year. Takes US marketings to 111.5 million. Year to date data (December 7) shows Canada has sent 5.222 million small pigs, market hogs and sows. Take 5 million off 11.5 US market hogs the US origin hog slaughter in 2013 would be 106.5 million.

The USDA reported the US breeding herd was 5,788 in September 2012. We believe that’s a good indicator of the breeding herd size that produced US market hogs in 2013. Abracadabra 18.4 US market hogs per breeding animal per year? We repeat this as we wrote similar calculation couple weeks ago and some challenged our arithmetic.

Maybe we are wrong but we don’t think so. If it’s 18.4, how many are at 16? Makes us wonder if profit models are correct? What is profit at 18.4? No wonder there is no expansion, who can afford the capital and risk?

We have been in the business a long time. We are in the Genetic business. We always suspected a high level of overly optimistic productivity claims. It’s why Genesus uses only actual Customer records from a Calendar year to show productivity.

We want definite timelines to establish productivity. Not a months results extended to a year as some of our lame competitors do, or as they do in Europe, don’t count the sows as we do, that why their European Genetic results don’t ever seem to be as good in North America.

Red Hot Early Wean and Feeder Pig Market

We expect $1.10 lean market hogs. We believe Summer Cash will reach $1.10, we doubt if lean hog futures will. June Lean Hogs closed Friday at 100.5, so out $1.10 is out there could be wrong but t’s what we see coming. Less Beef, consumer Chicken fatigue, steady export, a stronger US economy, US population growth (more to feed), there is no way any sow herd expansion can get pigs raise for the summer market. It’s our turn to make some real money.

In the last few years hog production has been tough. It has taken a toll on many. This includes our families as worked in a business that was swallowing cash and equity. It’s Christmas and a New Year’s coming. It’s time to be thankful and optimistic. By nature we are all optimistic, we are builders we are entrepreneurs, we produce food, and our business has honour. Have a Merry Christmas and Happy 2014.

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