June Lean Hog Prices surge past 80 cents
On August 6, June lean hog prices were $65.50 on the Chicago Mercantile Exchange. February 1 this year, June was $74.65, last Friday February 26 June lean hogs closed at $81.40. This is an increase of about $30.00 per head since August, and about $12.00 per head in the month of February. Lean hog futures going higher is a belief by traders that pork demand is getting stronger from the lows of the summer that were at the time being hammered by H1N1 and the concern for the domestic and global economy. Couple this with the realization of 4 million fewer market hogs in the U.S.A. – Canada inventory compared to January 1, 2008 – is there any wonder lean hog futures are moving higher?
Cash hogs are also tracking higher with Iowa – Minnesota lean hog prices Friday at 69.97. This is up over $10.00 per head from the previous Friday. Higher Futures = higher lean hog prices. We need it! Two and a half years of hell is enough.
Storage
Pork in storage on January 31 this year was 495 million pounds down 110 million pounds from a year ago. This is a reflection of supply and demand. Last year on January 31 combined poultry, beef, and pork in cold storage was 2.210 million pounds, this year 1.8454 million pounds. This is a decline year over year of about 350 million pounds or the equivalency of 5,000 trailers of meat less in storage. (35 tons per trailer). This lower supply means the market is closer to the bone. More hand to mouth. As pork supply drops over the coming months lower cold storage levels allow for higher prices.
Feeder Pigs
In August last summer, feeder pigs were just over $10.00 each. Last week cash feeder pigs averaged $67.61(40 pound) according to the U.S.D.A. Last Friday the D.T.N. livestock margin for market hogs indicates you can pay $71.95 for a 45 pound feeder pig (July 2 – 260 pounds). A 260 pound hog on July 2 using lean hog futures equals $159.88. This is a heck of a lot better than what we have had.
Brazil
World markets affect where our own hog market is going. Last Friday we were speaking to the Genesus representative in Brazil, Martin Riordan. Martin reports that Brazil’s hog price has jumped in the last couple of weeks to 2.25 Reals per kilo or 56 cents per U.S. pound live weight. These are the highest hog prices in Brazil since the summer of 2008. Brazilian producers like North America have lost significant money over the last 2.5 years. Brazil is a major exporter of pork with over half of its pork production exported. The surge in hog price reflects Brazil’s and the world’s supply and demand. Just as higher prices in North America support Brazil’s pork price due to export competition. It’s vice versa – higher prices in Brazil supports North America’s hog prices.
The corn harvest in Brazil has been a bumper crop. Last Friday in the south of Brazil where much of the livestock and poultry is produced corn was $146.00 per tonne or about $3.56 U.S. per bushel. In the interior, Mato Grosso corn coul be as low as $3.00 a bushel. Brazil’s soybean harvest is just beginning but there are expectations for a bumdper crop.
Russia
We had Russian producers visit us last week. Hog prices in Russia continue to be strong with producers receiving approximately $1.00 U.S. per pound live weight. We were told early wean pigs are fetching $85 – $90 US each. Feed prices are similar to North America. We have read reports where pork trade between U.S.A. – Russia might become easier. It doesn’t take a super pork salesman to buy pork in North America and make a profit in Russia.
Sow Prices
The sow price has surged. Sow marketing’s have dropped 15% since the fall (65,000 – 55,000). At the end of last week 450 – 500 pound sows were 61.60 cents per pound up from a year ago, 49.73 cents per pound. Sows 550 pounds and up were 66.71 cents per pound last week. This is up from last year’s 55.12 cents per pound. Sows are double in price compared to last summer. A 550 pound sow can bring $370. The producer’s that kept old sows rather than selling them now have the opportunity to sell the sow and replace them with genetically improved gilts and have money left over. As market hog prices move closer to 80 cents, we believe that this will continue to support sow prices.
June lean hog prices reached over 80 cents lean. Last week cash lean hogs touched 70 cents – up $40.00 per head since August. Demand is stronger supply is dropping with 4 million fewer hogs in inventory compared to June 1, 2008. There is less pork, less beef, and less poultry in storage. Other global hog prices are increasing or staying strong. The last 2.5 years have been hell. H1N1 (swine flu) is gone and the domestic and global economies are getting stronger. In the next few months less hogs coupled with increased demand could push lean hogs to 90 cents.
Categorised in: Pork Commentary
This post was written by Genesus