1 March 2024

4 minute read

By: Jim Long

North America

There is market momentum that will finally lead to profits in our industry. Why?

Lean Hog Futures – reaching $1.00 plus lb. in July.

Corn – US National Cash Corn average $3.80 a bushel. Lowest in four plus years. Down from lofty heights of $6 to up to $8 a bushel.

Soymeal – March futures $331 a ton down from $440 in November.

Current Breakeven – Farrow to Finish in 85-90¢ lb. range.

Hog Price – National Daily Producer sold average price (249,144 head) last Thursday 81.12¢ lb. Up from the 60’s not so long ago. The price in 80’s while US marketing about 2.7 million hogs a week.

• US Pork cut-outs were 91.16¢ lb. last Friday in the face of marketing's in 2.7 million head a week range.

• DTN calculation what you can pay for a 40 lb. pig at June futures- current feed prices - $103 (corrected).

• Latest US export stats indicate increased year to date of plus 10%.

• Sow slaughter in January up 20,000 head compared to last January. Last year December – February quarter dropped 60,000 sows. We expect the US is continuing to liquidate cutting production (last week 67,000 plus). We expect at least 100,000 head liquidation this quarter taking US sow herd down 350,000 from inventory peak middle of 2022. Less sows will lead to fewer pigs. We expect to see lower year over year hog numbers to begin in the next few weeks.

Summary

Lean Hog Price has momentum. We have lean hogs 81¢ lb. Pork cut-outs at 91¢ lb. in the face of week after week of 2.7 million a week marketing's. Cost of production between 85-90¢ lb. Hog marketing's will decline seasonally to 2.3-2.4 million a week. The obvious lower supply we expect will see a major jump in hog prices and cut-outs. Our point if we can get current prices in the face of 2.7 million a week how high can prices go with 300,000 head plus less a week? Throw on top of this record low cattle numbers and beef cut-outs $3.00 lb. We believe this scenario could lead to hogs this summer up to $1.20 lb. with fall hog prices much higher than current lean hog futures indicate. The industry needs some profits. Record losses over the last 18 months has taken at least $5 billion of equity. The giant hole needs to be back filled.

Other Observations

At the winter state pork shows there have been several talks on sow mortality and prolapses.

The latest quarter of data available from PigCHAMP Benchmarking indicates a 15.82% mean sow mortality the highest on record, in 2018 it was 11.68% and in 2010 it was 7.91%. Certainly, doesn’t take much to see how the mortality is going up, up, up.

SMS – MetaFarms Database calculated that a dead sow loss value and opportunity is in the $1,000 range. The sow mortality increases from 2010 to current is roughly 8%. On a 6 million sow breeding herd the roughly 8% difference would be in 480,000 more dead sows a year times $1,000 value = $480 million – Real Money.

Recently we had a large production system visit Genesus. They have over 100,000 sows and are a World Mega Producer. They have used Genesus exclusively for eight plus years. The owner thought they better investigate other genetic companies to see if Genesus was still their best option. Their production team visited some of the usual suspect genetic companies. They decided to stay with Genesus. They found all the genetic companies they could consider were over 15% sow mortality plus wean to finish mortalities. The company’s Genesus sow mortality on over 100,000 sows is under 8% and wean to finish 6% (not high health). Prolapses with Genesus irrelevant.

The company also has a packing plant and have own solid retail pork base. The Genesus – Jersey Red Duroc pork is delivering a market leading taste experience separating them from the cardboard tasting options from the Prolapse Is Coming – dead sows – dead pig – company.

Better Pork – Pigs that live – It matters.