26 June 2023

2 minute read

By: Jim Long

Europe

South America

North America

Asia

• U.S. Pork in cold storage at the end of May was 525,000 lbs. down 4% from a year ago. The first time we have had lower pork storage year over year for several months. U.S. weekly pork production is around 500,000. Storage 1 week’s production.
• Sow slaughter for the latest week was 66,861 head. We believe a clear sign of ongoing liquidation. We estimate anything over 60,000 a week, clear sign of liquidation.
• Last June 1 the U.S. breeding inventory was 6.168 million. We expect this June 1 to be about 100,000 head lower.
• Iowa – S. Minnesota hog weights continue to slide. A week ago, 278.5 lbs., week before 279.9 lbs. (-1.4 lbs.). A year ago, 283.6 lbs. (-5.1 lbs. year over year). Lower weights indicate producers willing to sell. Packers ready to buy. On April 24th Iowa – S. Minnesota price was 67.44¢ lb. June 21st it was 96.97¢ lb. A gain of almost $60 per head. We expect the lower weights we are seeing are a positive sign that the hog price can continue higher as packers chase hogs.
• The corn price has had its gyrations recently. Weather is the big factor. Looks dry and corn goes up. Rains it goes down, a real rollercoaster. Two realities U.S. corn exports -33% from a year ago. There are places in Brazil as low as $4.32 bushel, it is also a limiting factor on U.S. corn price increases.
• Liquidation continues in Germany. Westphalia one of the larger hog states report that in May their sow herd decreased (-3.4%) to 321,400. Tells us when you consider coming hog supply in Europe it's still declining despite record hog prices. The overall effect of disease, antibiotic restrictions, labor, environmental rules, etc.
• ASF is still a factor in China. This week we heard of one huge multistory site breaking. The ASF continues to push pigs into the market from breaks holding down prices. The financial losses of China mega producers are major with their stock values near all-time lows. We estimate that China hog producers are losing $50 per head times 12 million hogs (country production) a week = -$600 million a week. Losses like this is pushing liquidation.

Summary

This coming week the USDA will release the June 1st Hogs and Pigs Report. We expect to see lower sow and pig numbers. Let’s hope it's low enough to put some optimism into market. Prices are set by supply-demand-optimism or lack of.