Last Friday US lean hogs reached 90¢ lb. Pork demand and lower hog supplies are driving prices higher. Packers margins remain good with USDA pork carcass cut-outs over $1.01 per lb. Producers and Packers both making money. It’s a virtual day at Disneyland for the Pork Industry.
My father always said a major indicator of market direction was “who’s calling who.” For many months Packers called virtually no one looking for hogs, at the World Pork Expo we had Packers calling. To us it was an indication of a coming surge in prices. Since the WPX lean hogs have jumped over 10¢ lb. or $20 per head. Who’s calling who! As the new packing plants come on board we expect even more calling. With surging Pork cut – outs over $1.00 a lb. lower hog supplies, good packer margins. We expect higher pork cut – outs and higher lean hog prices over the next few weeks.
For months even when summer lean hog futures were in the 60’s we steadfastly wrote summer lean hogs would reach into the 80’s. This was based on Global Hog Prices we monitor as indicators where North American competes in the export market. Exports pull prices. A lot of forecasters talk about countries they never been too or done business in. We are fortunate in our business to get daily Global Market exposure; it helps us see beyond what used to be called the “back 40 acres”.
It’s one of the reasons Genesus is directly involved in the Global Mega Producer project. It’s a Global Industry. We need to all “Think Globally, Act Locally”.
This link will take you to an interview re Global Mega Producer held at the World Pork Expo.
Ontario Pork Congress
This past week we attended the Ontario Pork Congress. Ontario as a province of Canada has about 300,000 sows.
Happy Producers Surging U.S hog prices which Canada mirrors and a Canadian dollar that is worth 75¢ to the U.S dollar is leading to Canadian Farrow to Finish profits of between ($70-90 per head currently)
Ontario has not enough packing capacity. 20-25,000 head a week travel 10 hours to Quebec for market.
Ontario has many producers. There are only 2 producers with over 10,000 sows, they are in the 15,000 range. Most are family farms, grow corn, raise hogs, own land. Land in many areas is CAD $20,000 an acre ($44,000 Hectare). The wealth from land and livestock production has lead to many producers having net worth in the multi million range.
There are some new sow barns being built, some finishing. Hard to get building permits to build. Sow Barns 2500 sows – $5 million U.S. Finishing $300 U.S space (2500 head). Some expansion but also smaller produces quality. Land at $20,000 acre, generational change, age of barns – equipment, labor availability, all contributing to some producer exiting. When dust settles we expect little net sow expansion.
Lots of talk at Ontario Pork Congress about the new packing plant in Michigan. It is less then 4 hours from some Ontario Producers. When it starts up probably will lead to some shifting where hogs go. Tyson, Indian Pork and JBS Swift and Hadfield Pens will have fewer hogs to chase when Michigan starts.
In Canada Packers will not purchase Paylean hogs. In the U.S lots of Paylean pigs still fed. Ontario Hog Producers see the benefit of feeding Paylean in cost and performance. The Producers have lost that benefit. A couple producers told us that if U.S packers would buy Paylean fed pigs, they would want to go there. The economic advantage.