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Jim Long Pork Commentary: supercharged profits

Last week we attended and exhibited at the VIV-China. Take home message- If you have pigs in China, Prices are very Good!

25 September 2019, at 3:00pm
  • 13 lb. isowean: 1100 rmb or $150 US
  • 36 lb. feeder pig: 1500 rmb or $205 US
  • Market Hog price: 3120 rmb at 280 lbs. - $427 US
  • Profit per hog: 1600 rmb - $219 US

We all remember PED - we lost 7 percent of our pigs as an industry. Most had the most profitable year ever due to high prices. It’s kind of bizarre; ASF for many in China is like a super charged PED re: profit.

$200 plus per head- if you are down 50 percent in production in China but still have 50 percent to sell it doesn’t take a computer or ag-economist to figure you are still making good money.

In USA-Canada we are fortunate not to have ASF but unfortunately we are producing pigs under the cost of production. No wonder there is next to no new sow barns being built in US but in China many new sow barns under construction.

The amazing thing about Chinas prices is the fact the sow inventory continues to decline. The price of pigs and market hogs probably has further upside due to the lower sow inventory compared to where it was nine months ago, that is producing today’s market hogs. Probably in the nine months’ time period China lost another 8-10 million sows? This dog has not hit the end of the chain.

Last week US early wean pigs averaged $31.13 up $5 from the week before. We will probably see continued increases over the coming weeks as we move towards higher monthly lean future prices.

40 lb. Feeder pigs averaged $39. US last week. These prices are below break-evens for finishers. The small pig story, from feeder pig brokers; pricing is being suppressed by lack of positive psychology, profits and limited finishing space. We expect if the market attitude and profits improved so would space availability.

We expect finishing capacity is at seasonal maximum inventory.

Last week US was marketing 488,000 hogs a day. Doubt if 488,000 a day small pigs are being placed for March marketings. That will increase space and then demand.