U.S Summer Lean Hog Contracts Reach New Highs
The bullish run of summer Lean Hog Contracts continued last week with the CME Friday close reaching new life of contract highs. June 81.85, July 81.900, August 81.300. On April 21 just over a month ago June lean hog futures were 67.77. Since April 21 June has jumped about $30 per hog. That is a bullish move if there ever was one. Its been driven by demand, reflected by U.S Pork Cut-Outs which were $90.79 a lb. last Friday. Domestic and Global demand is pushing the ability of Packers to get strong prices from pork buyers. This despite record U.S pork production the last several weeks. Pork demand is currently phenomenal and we expect over the coming weeks as hog market numbers seasonally decline the pork cut out and hog prices will continue to surge higher.
To put in perspective U.S Beef cut outs for a carcass range from Select $2.18 lb. to Choice $2.45 lb. Pork cut outs at 90¢ puts wholesale pork meat at 40% of current beef cut out. Pork is the competitive red meat for consumers.
Going forward if we could ever get rid of our obsession with lean in our industry and focus on pork with better taste and flavor the opportunities to pull market share from beef is plausible. The ratio of beef price versus pork allows for higher pork prices if we can deliver a product that meets the consumers taste and flavor desires. Consumers vote with their money and currently they will pay significantly more for Beef then Pork. There is an opportunity for Pork if we focus on demand, to evolve our pork we produce more in the direction of better tasting pork. That means darker pork, high water holding capacity and more marbling. Taste, Flavor is our key to pushing hog prices and pork prices higher. People eat beef because of taste, they didn’t necessarily want to spend more money.
World Pork Expo
Next week is the World Pork Expo in Des Moines. It is a time for the U.S and International industry to get together. We look forward to it because we get to see customers and industry friends. There is value in interaction with fellow producers. We all can get in our own bubble and its good to get out and be exposed to other people and ideas. Our industry has evolved mightily over the years. Consolidation has and will continue. There are now 27 Global Mega Producers with over 100,000 sows. Evolution will continue in our industry. We all are challenged to keep up. Coming to the World Pork Expo exposes us all to what’s here and what’s coming. We will be in the Genesus Tent East of the Varied Industry Building. You’re invited to drop by and talk Pigs. You like me livelihood probably depends on it and where its going.
This post was written by Genesus