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US Hog Markets

by 5m Editor
26 April 2012, at 1:10am

US - Margins were mixed since the end of March, deteriorating in nearby Q2 and Q3 while improving in Q4 and Q1 of 2013, writes Doug Lenhart, General Manager at Genesus USA.

There has been a general tone of weakness over the past two weeks for both the hog and feed markets since the USDA hog inventory, quarterly grain stocks and prospective plantings reports were released.

Genesus Global Market Report
Prices for the week of April 15, 2012
Country Domestic price
(own currency)
US dollars
(Liveweight a lb)
USA (Iowa-Minnesota) 80.66¢ USD/lb carcass 59.64¢
Canada (Ontario) 1.49¢ CAD/kg carcass 54.40¢
Mexico (DF) 18.10 MXN/kg liveweight 62.29¢
Brazil (South Region) 2.03 BRL/kg liveweight 48.54¢
Russia 95 RUB/kg liveweight $1.45
China 13.69 RMB/kg liveweight 98.45¢
Spain 1.29 EUR/kg liveweight 77.22¢

On the feed side, while the old-crop corn situation appeared friendly based upon the 1 March stocks report, the April WASDE did not reflect lower ending stocks due to expectations for greater wheat feeding through the summer.

Meanwhile, corn planting has gotten off to a record pace, with 7 per cent of the crop planted as of 10 April. The progress exceeds the 5-year average of 2 per cent and breaks the old record of 5 per cent achieved in 2000. Illinois already has 17 per cent of its crop planted compared to a 5-year average of only 1 per cent for this point in April.

Soybean meal prices remain supported by further reductions to both the Argentine and Brazilian soybean crops in the April WASDE which tightened the global soybean meal balance sheet.

The hog market reacted negatively to recent news that China’s Q1 pork production rose 4 per cent to 15.1 million metric tons, while March pig inventories in the country were up 3.9 per cent to 456 million. The data seem to confirm a recovery in the nation’s herd and portend lower pork export demand this summer.

2nd Qtr ’12 Most Recent Offering of $3.30, the low was $2.42, the high has been $19.39 and the 5 year percentile of 28.4 per cent.

3rd Qtr ’12 Most Recent Offering of $5.67, the low was $1.20, the high has been $14.07 and the 5 year percentile of 65.6 per cent.

4th Qtr ’12 Most Recent Offering of $1.31, the low was ($0.14), the high has been $7.19 and the 5 year percentile of 68.9 per cent.

1st Qtr ’13 Most Recent Offering of $1.98, the low was $1.08, the high has been $6.04 and the 5 year percentile of 63.5 per cent.

The Hog Margin calculation assumes that 73 lbs of soybean meal and 4.87 bushels of corn are required to produce 100 lean hog lbs. Additional assumed costs include $40 per cwt for other feed and non-feed expenses. Thank you to Commodity & Ingredient Hedging, LLC (CIH) for the margin data. Please visit www.cihmarginwatch.com to subscribe to the CIH Margin Watch report.