Markets

Nasty week for hogs

Jim Long Pork Commentary

10 January 2023

4 minute read

By: Jim Long

Last week it seemed the hog market had a holiday hangover. Shorter weeks of slaughter rarely seem to work for producers. This year was no exception. Lean Hog futures and cash prices all languished significantly. We expect as the dust settles and business returns to full week both lean hog futures and cash prices will rebound. Why? There are still fewer hogs domestically and globally. Also, less beef and less poultry. The only way to ration lower supply is higher prices. June futures were $1.05 on Friday. We expect in June lean hogs will reach $1.20.

Grain

Grains had issues last week. Corn down 24¢ bushel, soybeans down 32¢ bushel, and wheat down 49¢ bushel.

Corn in the USA is interesting. As of last week, U.S. corn export sale commitments are 47% lower than a year ago. U.S. corn ethanol production is barely holding steady. Certainly, makes you wonder where corn prices can go with exports significantly lower, ethanol production only steady, and all indications of less red meat and poultry production cutting demand.

Gene Editing

We have expressed concern about the ramifications of consumer acceptance of GMO-Gene Edited pork. A recent Iowa State survey indicates around 60% of women said they would be unwilling to eat and purposely avoid gene-edited foods.

The other issue as producers we should consider before we go down the path of consumer challenge. How well does the technology work? An article by the renowned MIT Technology Review (Massachusetts Institute of Technology) reports on Gene Editing. An interesting part of the article on GMO-Gene Editing – PRRS.

“In experiments on pig cells, the Genus (PIC) researchers have tried many possible edits to the CD163 gene, looking for those that occur most predictably. Even with such efforts, the pigs being born have the right edit only about 20 to 30% of the time.”

Link to the full article: https://www.technologyreview.com/2020/12/11/1013176/crispr-pigs-prrs-cd163-genus/

Seems to be a long way off that GMO-Gene Editing technology can deliver 100% of the population protected for PRRS. Makes you wonder not only about consumer acceptance but how effective the technology will be. We have all encountered products sold to us in the hog industry that the hype never delivered the expected results.

Finishing Mortality

An article by Bradley Eckberg MetaFarms/SMS in the National Hog Farmer reports on Finishing Mortality – data is from over 10,000 closeouts that MetaFarms has. The article highlights the continued increase in finishing mortality over the last ten years. The average is up nearly 1.5% over the last ten years.

Last week we showed U.S. hog slaughter at about 126 million. Let’s say a 1.5% increase is equal to 1.9 million dead hogs. Let’s use the $80 value for a dead market hog. Our Farmer Arithmetic $150 million per year opportunity loss for the U.S. industry with the extra 1.5%. There is value in using resilient genetics. Over the last ten years, the industry has moved to mostly genetics owned and or based on European genetics. Not robust, lower appetite, temperament issues (tail biting, etc.). End of the day more dead pigs.

MetaFarms Performance Based on Mortality 2022
	<3%	3-6%	>6%
% of total group	22.8%	43.5%	33.7%
Start wt. lb.	56	50.5	46
Out wt. lb.	282.37	284.1	282.27
Feed cost lb. of gain	41.78¢	42.34¢	43.70¢
Average daily gain lbs. per day	2.03	1.95	1.86
Average daily feed intake lbs. per day	5.58	5.51	5.35
Feed Conversion	2.75	2.82	2.87
Average day of finishing	110.7	118.3	123.0

Lots of data from a large database. Some observations:

Heavier pigs into finisher had lower mortality, growth, and feed conversion.
Lower-mortality pigs have higher daily feed consumption and growth rate.
It appears that pigs that live, eat and grow faster have a better feed conversion (Dead pigs eat feed before they die).

To us this data reinforces our premise high appetite pigs have lower mortality and lower cost of gain while getting hogs finished sooner (13 days). All economic factors contribute greatly to profitability potential.