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US Hog Margins, 4 November 2011

by 5m Editor
10 November 2011, at 8:09am

US - Margins dropped slightly since the middle of the month as hog prices weakened while feed costs held relatively steady, writes Doug Lenhart, General Manager for Genesus in the USA.

Most of this weakness was evident in nearby periods, with deferred margins only down slightly from two weeks ago, and overall profitability through the first half of 2012 remains very strong above the 90th percentile of the past five years. Even the second half of 2012 is projecting margins above the 80th percentile of the past five years.

Hog prices have begun to slip as it appears cutout values are coming under pressure. Cutout prices late last week were down around 2 per cent from the week before, and are beginning to reflect back to cash hog prices which likewise have declined. As of Thursday, the Iowa/Southern Minnesota lean carcass price was quoted at $86.05/cwt., down $6.20/cwt. or 7.2 per cent from the week before.

Feed costs meanwhile have stabilized as crop producers are deciding to store rather than sell newly harvested bushels off the combine. Basis levels are firming as a result, although demand remains tepid so far this marketing season. The current marketing focus remains on the opportunity to protect historically strong margins throughout 2012.

Genesus Global Market Report
Prices for week of 31 October 2011
Country Domestic price
(own currency)
US$
(per pound liveweight)
USA (Iowa-Minnesota) 88.18¢
US$/lb carcass
65.25¢
Canada (Ontario) 1.65
C$/kg carcass
60.57¢
Mexico (DF) 20.90
MXP/kg liveweight
72.36¢
Brazil (south region) 2.67
BRR/kg liveweight
71.82¢
Russia 90
RUB/kg liveweight
$1.32
China 17.92
RMB/kg liveweight
$1.28
Spain 1.19
€/kg liveweight
74.86¢