Jim Long Pork Commentary, A few Market Observations, September 3rd 2019

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Jim Long, President and CEO Genesus Genetics

A year ago 53-54% U.S. market hogs were 44.60₵ lb. this year last week 69.62₵ lb. This year market hogs are bringing $50 more per head.

Last week U.S. cash feeder pigs averaged $37.02. A year ago same time they were $20.00.

DTN-Ag Data does a calculation daily on Livestock Margin and what you can pay for a 45 lb. feeder pig. Assumptions used are generally in favor of feeder pig buyer when they use assumptions that are far below industry norms i.e. feed conversion 3.1 to 1 (norm 2.8-1). Average daily gain 1.70 lb. (norm 1.90 lb.) even despite these marginal assumptions, last Friday Livestock Margin calculation showed you could pay $52.05 for feeder pig. The market usually trades close to this calculation.

Last week U.S. marketed 2,461,000 compared to 2,464,000 a year ago. Year to date U.S. marketing’s are up 3.0%

Holidays are bad for producers. It appears U.S. packers were not aggressive Saturday with 82,000 head. With holiday Monday looks like plant employees got 3 day weekend. When harvest days are limited it usually drives hog prices lower.

It appears harvest weights are similar to a year ago, in the 208 lb. range. This tells us that hogs are current relative to a year ago.

We reiterate what we wrote a couple weeks ago. Few is any new sow units being built in the U.S.A. In our opinion most producers have seen little if any profits over the last year. Profits create expansion.

Pays to have access to China market. Spain has liveweight at 74₵ U.S/lb., in U.S. is 48₵/lb. liveweight. That’s a $70 U.S. per head difference. China market access and significantly less tariffs is a huge advantage to Spain.
European Pork Exports to China January-June year over year increased 41.9%. 680,686 tonnes (2018) vs 965,768 tonnes (2019).

Corn – Soybeans. With China’s swine inventory officially down 32% approx. 140 million head, is there any wonder they don’t need soybeans (corn) even if trade war gets settled. Can’t imagine we will see surge in soybean exports. Pork gets moving with tariff relief, look at Spanish prices to see where we would get to (74₵ U.S./lb. liveweight)

China Update

  • China National Average hog price last week: 26.21 rmb kg- $1.68 U.S. liveweight lb.
  • South China had highest market 29.29 rmb/kg- $1.88 U.S. liveweight lb.
  • Estimated profits farrow to finish (if have a full herd) 1509 rmb/head- $97 U.S. per head.
  • Sow inventory 33.26 million- Year over Year down 31.2%
  • Feeder pigs 47.95 rmb\kg. – $3.10 U.S. lb. – 45 lb. pig $139.
  • China corn price 1,936 rmb ton = $7.85 U.S. bushel- 6.8% higher than a year ago.
  • China Soybean Meal Price- 3078 rmb ton = $436 U.S. Ton

We expect the record high hog prices in China will lead to increased pork and other meat imports. There are reports of pork rationing in some areas. Time will tell but nothing we can discern shows ASF under control.

Get acquainted with the
Global Mega Produce

A program of recognition led by National Hog Farmer sponsored by Genesus Inc.

Christensen Farms

Christensen Farms has again been recognized as a Global Mega Producer for 2019.

Headquartered in Sleepy Eye, Minnesota, Christensen Farms is one of the largest, family-owned pork producers in the United States.

With nearly 1,000 employees and 1,500 contract partners, the company spans across the Midwest to include facilities in Minnesota, Iowa, Nebraska, Illinois and South Dakota.

They currently operate four feed mills, manage 145,000 sows on 44 farms, and oversee more than 350 nurseries and grow-finish sites.

The desire for a more integrated production model led Christensen Farms to become the largest shareholder of Triumph Food LLC.

Triumph Foods, LLC was organized in 2003 by a group of the largest U.S. independent pork producers whose goal was to create a pork processing operation capable of recognizing the benefits of an integrated business model. Today 487,200 sows are in production under the Triumph Foods brand. The company began processing operations in 2006, in St. Joseph, MO, currently with a processing capacity in excess of 6 million hogs per year

Triumph Foods also holds a 50 percent partnership in another primary pork processing plant, known as Seaboard Triumph Foods, LLC of Sioux City, Iowa. To support further pork processing for specialized items such as bacon and other premium products, Triumph Foods members own 50 percent of Daily’s Premium Meats.

Through key packer and partner relationships, Christensen Farms markets nearly 3 million hogs per year with increased traceability, quality assurance and pricing stability for their customers.

Let’s congratulate Christensen Farms for being a Global Mega Producer.

Greg Howard – VP of Strategic planning, Christensen Farm and Bob Kemp PhD PAg – Vice-President Genetic Programs and R&D, Genesus Inc

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Jim Long Pork Commentary

www.genesus.com

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