10 July 2023

3 minute read

By: Jim Long

Last week the U.S. hog price reached over $1.00 lean and carcass cut-outs closed at $1.08 lb. Friday. To keep in context this April 24th Iowa – Minnesota price was 67.44¢ and last Thursday $1.00.61 lb. A $65 plus per head increase. The first time the price has been over $1.00 since last October. Over those last 8 months lots of red ink. At $1.00 some producers will not be losing money.

Other Observations

• U.S. sow slaughter the last few weeks has averaged over 65,000 per week. Tells us liquidation continues. We calculate anything much over 58,000 per week is clear sign at sow herd decreasing.
• Iowa – S. Minnesota slaughter weights continue to decline the latest 276.7 lbs., week before 277.5 lbs., a year ago 279.1 lbs. We believe when you consider it hasn’t been as hot as a year ago the difference of 2.4 lbs. is quite significant. It appears producers and packers’ dynamics are leading to hogs being pulled ahead.
• The National Corn Price Index end of last week was $5.28 bushel. The lowest average price since the fall of 2021 (almost 2 years). Lower feed prices will be lowering break evens for swine producers.

September Corn futures closed Friday at $4.87 bushel. The lowest September futures have been since October 2021. It's raining in many areas, there’s a huge crop planted and there moderate temperatures for pollination in many areas.

There is a saying the surest cure for high prices is high prices. It appears high corn prices has led to huge corn planting in the U.S. and Brazil. More supply leads to lower prices. Brazil last week e.g., Dourados $3.82 bushel, Rondonópolis $3.71 bushel, Barreiras $4.31 bushel. Any wonder U.S. corn exports are down. Not hard to believe the lower prices in Brazil will keep downward pressure on U.S. corn prices.

• Germany once was the third largest hog producing country in the world. Per capita pork consumption is over 90 lbs. per person.

The latest German inventory indicates 20.7 million (1990 – 30 million) head down 7.3% (-1.62 million) from a year ago. In the last 6 months -651,000 of the 1.62 million indicating liquidation ongoing despite profitable markets.

The current German price of 2.50 Euros/kg is the highest ever recorded. ASF issues, Animal welfare, regulations, labor issues, farm scale (small), environmental regulations, etc. appear to be putting pressure on maintaining production. As German production declines there is less EU pork production and less EU pork for export.

National Pork Board makes Positive Move

We have believed for a long time that as an industry we need to produce a better pork eating experience for consumers. Taste is the most important dynamic for consumers repeat business.

Therefore, we are happy that the National Pork Board under new leadership of David Newman as Senior Vice President on ways to increase pork demand in the domestic market.

Hopefully they will save a bunch of time and money by seeing the obvious. Pork with little marbling and water holding capacity will never deliver a good eating experience.

The new Loin Complex Task Force created should do taste tests. The results will be obvious. The European derived lean genetics in this market will never deliver a good eating experience. How many producers who use these genetics, eat them themselves? As a producer when you go to a restaurant do you order a Pork Chop or a Steak? Why? From our own experience the Pork Chops disappoint too often and then we get mad at the short term thought process of our industry. Taste is what drives demand. If every American eats pork one more time per month, it's an extra 7 million hogs per year. That’s real demand not chasing a niche.