Jim Long Pork Commentary, PRRS Ripping U.S. Hog Production, July 5th 2021

703

Jim Long, President and CEO Genesus Genetics

Everyday we hear about new PRRS breaks. The latest is that 4 – 6,000 sow units being depopulated. It appears PRRS 144 is ripping through Midwest. Some PRRS serotypes you can shut down by closing herd and waiting. It appears 144 doesn’t abate, pigs continue to abort and die. Some see best solution is emptying sow herd and start again. Some of the farms depopulating are filtered, so much for that as a sure prevention measure.

The 144 PRRS in our opinion is at a level that is cutting production on a significant level. It will be hog price supportive.

Other Observations

Last week U.S. cash early wean pig averaged $44.49 each (40 lb. feeders $67.36). A year ago cash early weans were $6. The price increase is a reflection of the higher hog market but also the demand created by nurseries and finishers that are empty due to shortage of pigs caused by PRRS breaks.

Iowa – S. Minnesota hog weights are a real barometer of the current status of market ready hogs.

Iowa / S. Minnesota

Ave. Slaughter Weight (lbs.)

  2020 2021 5/year average
January – first week 289.0 293.0 286.0
June 26 284.5 276.9 279.5
Decrease Jan – June 4.5 16.1 6.5

 

It doesn’t take a Chicken Little Economist to see the huge decline (16.1 lbs.) we have seen in hog weights this year compared to last year or the 5-year average. Packers have been chasing hogs and producers have delivered. The 5-year low yearly average is 277 lbs. and that is usually around the first of August. We are at 277 lbs. a month earlier this year. This tells us over the next few weeks, if hog weights hold, slaughter will need to decline. In our opinion whatever scenario happens there will be less pork in the coming weeks compared to a year ago.

NPPC is the U.S. swine lobbying group in Washington. There was an announcement in January of further money from U.S. government for CFAP (a match of CFAP 1). Since then, Cattle – crops have gotten their Covid top up money. Pigs not. We hear repeatedly from NPPC how effective they are in representing producers’ interests. Seems other commodities have gotten what was promised. Why cattle got but not hogs? Better people – organisations representing them? A year ago Covid issues had early weans at $6, market hogs National price 30¢ lb. Losses over $40 per head. It was a Covid induced disaster. We understand there are people leaving at NPPC executive level. Hopefully a new fresh team will push harder for the interests of all producers.

We will be speaking at the annual National Pork Industry Conference (NPIC) in Wisconsin Dells next week. We will speak on our observations of the Global Hog Market and what it means to U.S. producers. We look forward to seeing you at NPIC.

Weekly sow slaughter is running at 62,000 per head level. Hard to put in context re herd building or liquidation. Sow mortality at record levels, PigCHAMP data base 13.9% last year (the highest ever), the genetic induced prolapse issue is spiking mortality. Some producers from Genetic Company A tell us 25-32% of sows shipped are receiving no value. This won’t be counted in sow slaughter data. It’s an epidemic sweeping through the sow base. How long can producers tolerate this sow loss armageddon. Dead sows don’t give pigs.

Summary

We expect hog prices to stay strong with pork cut-outs at $1.15 end of last week. A high number that we all dreamed about 6 months ago. We expect pork supply to decline in coming weeks adding strength. High feed prices are challenging profitability going into fall and beyond. We expect lean hog prices will be higher than futures indicate currently fall and winter