Jim Long Pork Commentary – November 9, 2015 – Tough Week for Hog Markets

Pork Commentary

Jim Long President – CEO Genesus Inc. info@genesus.com

Tough Week for Hog Markets

November 9, 2015

December Lean Hog Futures fell $4.20 this past week. February declined $4.45. Cash hogs dropped 6¢ lb. or $13.00 per head. Sucks to be a pig farm as we now have the lowest hog prices in 6 years. It wasn’t just hogs that fell; cattle futures declined $7-$11 per pound. It was a tough week for the red meat sector. Lots of beef, pork and chicken, about 70 million more pounds total a week ago compared to a year ago. That’s close to 2,000 more tractor-trailer loads of meat per week. Lots and lots of extra protein to get through. Are There Any Positives?
  • Chicken egg sets and chicks placed has dropped lower than a year ago. Maybe chicken has stopped expanding. The latest week data available about one million fewer chicks and eggs placed.
  • We are in the peak of hog marketing from a seasonable perspective. There are always more hogs now. Most years the fourth quarter is a timeframe losses for producers
  • US pork exports in September were 6 percent higher than the same month a year ago.
  • Hong Kong/China exports were double last September hopefully just the start of something much bigger.
  • Mexico is up 12% year to date.
  • South Korea is up 39% year to date.
  • It doesn’t take a rocket scientist to see that with abundant pork and other proteins available increasing exports would help hog prices.
  • Not sure, this is a positive but we suspect the lower prices we are seeing as hog producers will deepen some sow herd expansion plans.
  • We always wonder why as an industry we don’t focus more on eating qualities of our product, taste flavor, marbling are all driven to in consumer demand. Bacon and ribs are not lean products. Last week bellies (bacon) were $1.82/lb. Hams 65¢.   15 years ago, hams were selling for more than bellies, what changed? Did we get Pork too lean? Hams are lean but bellies are not, no matter how you look at it. People are voting with their money that they like bacon while ham struggles. Twenty years ago we remember a discussion with a large hog packer who was lamenting that bellies were 28¢ lb., he said if they get to .20¢ lb. they would go into dogfood His question what are we going to do with bellies? How the world can change!
But the point we wonder is, has the push to lean to some extent destroyed the flavor of loin and hams. As an industry, we sometimes get chasing our tail when we need to look at what really is driving consumer demand; flavor. Taste matters, that’s why bacon sells. Angus beef is popular, we know the reality we sometimes are paralyzed for the solution. As an industry we need to revisit balance between lean and flavor/taste  
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This post was written by Genesus