Allan Bentley, Sales & Technical Director, USA
Cut-outs are on top of $110. That has raised everyone’s interest and therefore prices of cash hogs over 75 cents live. Higher if you have the cut-out in your formula. We have the hog market in the black for the first time in 10 months. Summer prices usually have a tendency of taking care of themselves and this summer seems no different. Can we hit $100 live? I doubt it. Like it or not in 6 weeks is Labor Day and just as you can count on summer prices being good. We all know Labor Day brings the beginning of lower prices. December hogs are $74 as I write this. There is no money in that number, but I see no reason it will be higher when we get there. Barns are getting filled. Some that should not be due to their age. Canada is sending down as many pigs as they can. The production overall is very good. Yes, there is PRRS but either we are getting better as an industry at managing it or vets have figured out how to save more.
Whatever the reason North American production is good. I really thought barns would be empty all over, but they are not. I don’t think I have written this before and after talking to a friend of mine in the banking industry from Missouri, I am buying options to protect the pigs I will be sending to market in the 4th quarter. How is that for putting my money where my mouth is? I just do not see profitable hogs until next year after this next 6 weeks. I hope I am wrong, but it looks like we will get no help from demand so the only way to cure these prices is for less production. I mean a lot less! It is sad we can’t move markets by creating demand but if we can’t sell loins for $1.50 then we need to cut the supply. I think someday the industry will figure it out but until then those are my thoughts.
As for feed prices. Jim and I discuss this almost daily. My thought is the bottom is in. I also think the topside of corn prices is limited. December corn high I believe was 6.30 or close on June 21. Only the good Lord knows if it will get back to that level as he is in charge of the weather.