info@genesus.com
Last week the U.S. average net hog price was 91¢ lb. indicating a slight profit if we use 87¢ lb. as an average breakeven price for farrow to finish. As we watch daily hog weight reports they appear to indicate average weights near 280 lbs. Not as low as a year ago but they have dropped considerably from the 290 lbs. a few weeks ago.
Other Observations
- The USDA reported on Friday buy cash early weans $28.18 – 40 lb. feeder pigs $43.08. The latest Iowa State calculation on the cost to produce an early wean pig is $41.19. Our arithmetic a $13 per head difference.
- U.S. average National Cash Corn price was $3.84 a bushel, $1.00 a bushel lower than what USDA reports as production cost breakeven. The pork industry is getting an advantage of lower corn costs, thank goodness because with current hog prices of 91¢ lb. corn $1.00 a bushel higher than it is now we would be losing money. A reflection how fragile our supply – demand issue is.
- This past week have spent time with a major Chinese hog producer and Genesus customer. The hog price in China now has reached over 19 RMB or $1.22 U.S. liveweight a lb. A 286 lb. (130 kg) market hog is now bringing $350 U.S. dollars. If breakeven is 15 RMB kg current per head profits are about $75 per head. It’s what happens when you liquidate 3 million sows (7% of herd) and cut supply.
- China’s hog price has increased $90 per head in the last three months. If you believe in arbitrage at some point the price spread between U.S. – Canada hogs and China’s which is now $160 per head, there should be expectation of increased pork exports to China which will be supportive for exporting countries.
- EU pork industry is now being investigated by Chinese authorities to see if they have been dumping pork into China. Three major EU packers being investigated. If these will countervail duties placed on EU pork it will be a major difficulty for EU producers. China imported over $3 billion of EU pork in 2023.
- The Prolapse Is Coming issues continues. This past week a manager of a 4,000 sow unit reports 12 prolapses a week average 624 per year. Prolapsing just before farrowing. Solution, kill sow cut them open to save pigs. Employees love this. Wonder if Gene Editing will fix this debacle? 624 of 4,000 is 15% of herd per year. Using SMS – MetaFarms data dead sow has loss of $1,000 = $624,000. Of course, still more mortality on top of the 15% prolapses. We worry as an industry about animal welfare issues, how do we defend a plague of prolapses from genetics? Solution switch genetics.
Summary
Our hog price holding mostly steady. Feed prices lower. Next few months of lean hog futures don’t calculate into profits. Surge in China hog price should lead to more exports. It’s not looking good in Muddville, the plus – market moves when it’s least expected. It’s least expected so…
