Last week the U.S. celebrated the Thanksgiving holiday. It is a holiday to give thanks but for pig producers it’s a time where hog prices plummet as seasonal maximum supply collides with holiday shortened slaughter capacity.
The end result; hog prices are weak and usually selling below cost of production. This year is no exception. Current Hog Prices at 58₵ lean a lb., are well below break-even.
The September 1st U.S. Hogs and Pigs Report indicates 5-6% more hogs under 120 pounds then the previous year while 120 lbs. was 2% higher. We should begin to be marketing in the 2% range now – this will help hog prices.
U.S. Pork Cut-Outs were 82₵ lb. Friday and Hog Prices 58₵. A difference of 24₵ per lb. or $50 per head packer gross margin. 82₵ is good, it means pork is selling despite record kills. A packer told us last week that a couple weeks ago was their most profitable week ever. As weekly kills decline, there is definite upside for Pork Cut-out and hog price increases.
China is looking for Pork. We sell swine genetics not pork. We are getting many enquiries for us to supply pork. If we are getting such activity, suspect Packers getting inundated. All pork that goes to the black hole that is China’s food need will support our prices.
Chinese government is predicting 3 million tonnes of pork to be imported in 2020 from everywhere. That’s equivalent to 30-35 million market hogs. This expectation is based, we suspect, on significant recovery of China’s pork production. Might be too soon to predict that scenario, with ASF still prevalent.
We expect sooner rather than later U.S.-Canada hog prices will move to European prices that have been supported by large exports to China. Currently they are in the 95₵ to $1.00 lean range. Liveweight U.S. lb. European range 71-74₵ lb. Chinas current Hog Price is average 32.66 rmb/kg or $2.11 U.S. liveweight a lb.
An example of Exports to China is Cranswick – a leading British Pork Packer. Year to date China exports up 94 percent. Cranswick Boss – Adam Couch said “We are sending 100 lorries’ worth of pig meat every week”. “Demand is growing and we don’t see it slowing.”
Now Thanksgiving is over. September 1st Hogs and Pig Report showed 2% year over year hog supply. We expect lean hog prices to show strength over the coming weeks as Exports continue at a rapid pace.