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Pork Commentary: Hog Market & Lacking Traction

12 July 2016, at 12:00a.m.

US - A few weeks ago summer hog futures were approaching 90¢. But just like the corn market which has seen a collapse of almost a $1.00 per bushel, the lean hog market has declined to near 80¢. Packer cut-outs are okay with USDA saying 89.48 (Fob plant).

If there is any good news 53-54 per cent lean hogs are 81.66 higher then last year 77.88 at the same time.

As internal optimists we are hoping cash will get a shot of positivity now that the short week of 4 July holiday is over. Holidays are never good times for producers as tight packer capacity swings the pendulum the packers' way.

  • US carcass weights a year ago now were 211.23 lbs. compared to 209.2 lbs. we are seeing now. The lighter weights mean hogs are current in our opinion. Hot weather could strip tonnage and numbers to give us a cash price jump.
  • Of note as we close the first six months of 2016. US hog marketing’s are 59,199,00 million ,a year ago same time 59,278,000. A whopping difference of 79,000 fewer.
  • Chicken placements continue to run no more than ever to 1 per cent higher from a year ago. A year ago, National Composite Bralen/Fryer Report was $98.02, this year $94.38.
  • Let’s have some fun with numbers. YTD US Hog number 59,199 million; of this about 2.6 million are from Canada, feeder pigs, market hogs and sows. So let’s say for numbers' sake 56,600 million US origin hogs. US breeding inventory 1 June 2015 5.926 million pro rata this half year production by 2 to give a year which would be 113,200 million hogs. For argument's sake divide 113.200 million by 5.926 million = 19.26 hogs per breeding sow.

Now we can argue the accuracy, boars and gilts are in breeding inventory, also the reasonability, but I think we have 27 weeks in the number.

Point is, change a little bit but no way our industry on average is marketing over 20 hogs per breeding animal. Lots of room for improvement. Lots of opportunity.

We will bet at National Pork Industry Conference in Wisconsin this week. There we are told will be record attendance. We will report our observations. Genesus is a major sponsor. We hope to get value. Hope to see you there. We are speaking Monday afternoon. If you come we will try not to put you to sleep.