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Jim Long Pork Commentary

8 February 2024

3 minute read

By: Jim Long

North America

The canary in the coal mine in the hog industry is small pig and feeder pig prices.

This past week the 40 lb. cash feeder pig average price in the US was $57.32. The highest it has been since mid-April 2023, 10 months ago. A year ago, it was $79.22 this same week. The DTN – Agdayta calculation of what you can pay for a 40 lb. pig last Friday was $93.47. Not long ago 40 lb. feeder pigs were potential $25. With such a profit margin in place there is no doubt the feeder pig price will rocket higher as finishers chase pigs and some producers choose to finish rather than sell their pigs.

The $93.47 you can pay is a reflection of June lean hog futures of 97.50 lb. and feed prices the lowest they have been in two years. In Europe a 50 lb. feeder pig is currently 74.50 Euros ($80 USD).

Sow liquidation continues we heard of 2 - 2500 sows and a 4,000 emptying this past week. Sad testimony to our industry as it appears the only way to profitability is producer demise.

The province of Quebec in Canada has a program to financially incentivise swine producers to leave the industry. It is reported 22% of producers have applied. Only 9% will be accepted. Last July Quebec sow herd was 306,000. Farmer Arithmetic 9% decline = 27,000 sows, fewer sows at some point. What about the status of the other 13% not accepted? How many of these quit on their own? The Olymel Packing Company in Quebec has cut hog slaughter. Some hogs now being shipped 700+ miles to slaughter. How long can producers continue to pay for that cost? New catch phrase is “sustainability”, trucking hog’s 700+ miles is not.

Hog Packer Margins are excellent. You only need to look at how aggressive slaughter hog numbers and big Saturdays. If this continues, we expect hog weights to decline rapidly.

We were told current US Pork cut-outs in the 89¢ lb. range are near record for this time of year. US is marketing just under 2.7 million hogs last week. 89¢ lb. at 2.7 million hogs. There is no doubt US hog slaughter will be around 2.3 million a week average late spring – summer (400,000 a week less). What can cut-outs do? With so many fewer hogs be $1.20? $1.30? Lean hog prices will be north of $1.00. Time for producers to make some money.

Beef cut-outs in the $3.00 lb. range continues to tower over pork’s price but itself leading pork price support.

China like the US has suffered from major financial losses. Financial losses always lead to liquidation. No different in China. China government indicates inventories of swine end of December compared to a year ago. Sow herd down 2.48 million (5.7%). Inventory of pigs down 18.33 million or 4.1%. China sow herd liquidation about half of US herd or about Spain’s total. Last week the US sold 12,640 metric tonnes of pork to China. A big number. When China is short pork they will buy from EU, US, Canada, Brazil, etc. We expect China liquidation is at the very least 2.48 million sows. China is by far the world’s largest importer of pork.

Last week average China’s hog price was 16.33 RMB/kg ($1.02 lb.) up 17¢ lb. from two weeks ago (up $40 per head). Last week all prices sews, feeder pigs, cull sows, market hogs were the highest since mid-September. Cut 2.48 million sows. There ends up less pigs and higher prices.