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Jim Long Pork Commentary: US Hog market rebound

by 5m Editor
27 September 2018, at 12:00am

Last Friday the to US lean hog price averaged 60.24¢ lb. A huge jump over the last few weeks of close to $30 per head from market lows.

Cash price is being pushed up by strong US pork-cut-outs of 79¢ lb. The Packer’s gross margin continues to be strong - $40 per head range. This creates a positive attitude for packers to be aggressive in running their plants at maximum capacity.

Hurricane Florence

Hurricane Florence in North Carolina reportedly has led to around 4 million chickens dying. The pig losses are reported to be in the 5,500 head range. We expect the collateral damage of the flooding (lack of labour on farms, electricity, feed delivery) to lead to a much bigger impact than 5,500 dead pigs

North Carolina packing plants harvested next to no hogs for a week - a reflection of the logistics that the Hurricane affected. North Carolina Packers are at 60,000 head per day capacity

Our Observations

  • A year ago, 53-54% Lean Hogs were 58¢ lb. - last Friday we had hogs at over 60¢ lb.
  • A year ago, Iowa-Minnesota Live Hogs were averaging at 282 lbs.; Last week they averaged 278.4 lbs. 3.8 lbs. lighter compared to a year ago.
  • The small pig price is rising out of the toilet. Some Early Weans got as low as $8 a few weeks ago. Last week US Cash Early Weans averaged $33.87. Probably we will reach $40 in the next couple weeks.
  • US Sow Slaughter # August was 268,300 – last year August 256,500 sows.
  • US Sow Slaughter Year-to-date – 2,015,900. Last year (Jan-Aug 2017) – 1,969,200 sows. No question more sow marketing – 45,000 more year to date.

African Swine Fever

African Swine Fever in China, certainly the main market discussion with producers that we visited with last week. There were two more breaks in China last week. There has been a major effort from Chinese authorities to restrict pig market movement. This has affected prices. IE, the highest price in Zhejiang province 21Yuan/kg (1.41 US per lb. liveweight) and the lowest in Henan Province 10Yuan/kg (67¢ US per lb.).

A difference from high to low for a 250 lbs. market hog of $185 US per head! The huge price difference will make it even more difficult to control pig transportation.

Summary

  • US Cash Price has increased significantly.
  • Hog weights down year over year.
  • Cash small pigs have doubled the last few weeks.

It’s still misery to be a producer, but less so than it was…