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Pork Commentary: Heat Wave Pushes Weights Lower

by 5m Editor
26 July 2011, at 9:34am

US - The extreme heat and humidity that swept through the US the last several days not only caused great discomfort for people working in swine barns, cut pigs appetite but also ripped market hog weights lower, writes Jim Long in this week's Pork Commentary.

Last week the National Lean average carcass weights hovered around 199.5 pounds per carcass down around 3 pounds from the week before or about 4 pounds live weight. This was a huge drop week to week. The weight decline also happened despite weekly market numbers at 2,010,000 quite close to the previous weeks.

The chase of packers to keep hogs coming lead to a jump in market hog prices to $99.55 (Iowa – S. Minnesota) on Friday. Most producers with premiums will be receiving over $1.00 lean a pound once again pushing cash hog prices into historical high areas.

Of note a year ago 53 – 54 per cent lean hogs were averaging $79.60 a pound, while carcass weights were 3 pounds heavier. A year over year difference of $40.00 per head, not enough to rally compensate for the higher feed prices we are facing but a real reflection of pork domestic and export demand.

Feeder Pigs and Early Weans

Historically the yearly price low for feeder pigs and early weans is in this time frame. This year is no different. The hot humid weather that has slowed down weight gains has also seemed to back up barn space. The challenge to find barn space can be seen in the average price of cash early weans at $13.20 and feeder pigs at $39.64. It’s amazing we are hovering around the highest lean hog price in history but small pig producers are losing $20 - $25 per head. Part of the low price is the barn space issue but also high feed prices continue to limit profit potential for pigs to be finished. The train wreck that is the cash small pig market is not leading to sow head expansion.

National Pork Industry Council

We received the following from a reader last week about our comments on our NPIC report.

"I cannot help but see a long term trend developing because the signs and symptoms are popping up everywhere we turn. Maybe only a few of us see the signs of a perfect storm brewing. I hope that most of us realize the road we are on early enough to make a difference. This conference seemed to have highlighted this perfect storm that is spawning quite nicely."

For example:

  • "The CEOs like Donnie Smith, who are Capitalists of America, but remain ahead of the curve and realize the needs of consumers whose main fear at the present time is food safety, carbon footprint, animal welfare, etc... We see the Walmarts and Safeway’s leaning toward consumer demand, etc... (note: Donnie Smith clearly stated Tyson would not be using Pfizer Improvest – Castration Vaccine at this time!)

  • "Then we have Clint Lewis who is so far behind the 8 ball, it is actually pathetic. Consumers are in hysteria about food safety, effects of GMO, environment and how we are engineering and mass producing our food and he dares to bore us with his ramblings on blindly about just another warlord, sorry, I mean drug lord money grab?? (note: Pfizer who had announced that they are planning on selling its animal health division stated this past week they would not sell rights to specific products to Eli – Lilly – Elanco who had expressed interest. We wonder if Improvac was not wanted by Elanco?)

  • "And then we have best for last, Monsanto putting us on a guilt trip by reminding us that we have an overpopulated planet and they are the heros of food production and without them is only a brick wall in front of mankind."

Thanks for reader’s concern.

Summary

The hot weather has cut growth rates the consequent need for lean hogs has forced packers to bid up. We expect packers will have to keep strong bids to meet export orders. Hopefully rains in the US. Mid – West this past weekend will help lower the grain price. The hog industry is like real estate – location, location, location!! While small pigs languish at real low prices market hogs in Japan are bringing around $800 per head! The good thing is Japan will continue to import pork and those small pig prices will get stronger.