Summer Market Continues to be Lucrative
The summer hog market continues to provide strong profits. Lean Hogs over 90¢ lb. Last year same time U.S lean hogs were averaging 72¢ lb. The difference at least $36 per head to the better. Huge profit margin improvement. We had a real nice compliment last week at NPIC from an industry leader “Jim Long you are the only person that predicted 90¢ lean for this summer.” Indeed at times we wondered ourselves if it would happen, especially when June lean futures were 68¢ lb. Our feeling was strong packer margins, high price points in other countries and strong beef prices would pull U.S hogs to 90¢. Glad it worked out, producers work hard and this business has more then enough challenges. No one deserves profits, but if any group deserves a win its hog producers. When people talk of consolidation and fewer producers. Its good to keep in mind that most producers don’t quit because this business is eerie. I remember an industry leader saying about consolidation. “The weak and children are dead all that’s left are the warriors.”
Usually when there is sow herd expansion you would expect that sow slaughter would decrease. We need to point out that this year January to June, this year 1.492 million last year 1.426 million 66,000 fewer this year. June this year, 254,000 last year 240,000. USDA U.S in the quarter April-June sow inventory decreased 20,000. Expansion?
Meta Farms recently published data from farms totaling 700,000 sows, Nov 1 – April 30 – 6 months. What we noticed was the 12.9% sow mortality average in the lerge farm category. A year ago it was 10.8%. We believe some genotypes with weak legs and temperament not conducive to group housing are having a hard time in the push to group housing. Dead sows are lost revenue from sow sales and dead sows don’t provide pigs. We see the push to group housing is a big challenge for some genetic companies. It will be the next genetic company sort. Dead sows. No pigs. Not a profit enhancer.
This week we will be in England, Netherlands and Germany. Part of understanding the markets is getting out to see what’s happening. We go on Genesus business but while there we get the opportunity to get the opinion of fellow producers.
This trip I am travelling with two of my sons Spencer and Aidan. I am fortunate to take them with me. They go to all the meetings as its part of their understanding how business is done. We also get to see some sights, such as London, England. Next week we will report our observations on countries we visit.
Spancer and Aidan Long at Tower Bridge, London UK
This post was written by Genesus