Jim Long Pork Commentary – June 1st, 2020

Jim Long, President-CEO, Genesus Inc.
 

U.S. Hog Weights Continue to Baffle

Last week we observed that U.S. harvest weights were decreasing. This totally baffles us. There is no doubt the official USDA slaughter numbers have been significantly lower for the last six weeks compared to expectations or last year.

Last week we would have expected hog weights to hold or increase due to Monday being Memorial Day and Plants were closed. Instead, Tuesday-Wednesday-Thursday averaged 217.03 lb. carcass weight. The week before average was 217.20 lb. and a year ago 215.54 lbs. Three weeks ago U.S. lean hog weights were over 221 lbs. 

It’s hard to believe hogs are backed up 5 million as some have stated. That is almost 3 weeks of U.S. weekly slaughter. Weight difference week over week and compared to last year don’t indicate anything close to this high a number.

In our opinion watch the next two weeks’ slaughter. We expect with current packer margins and plant productivity, weekly slaughters will be over 2.3 million head, watch the weights if they continue to decline it could be a strong indication that we are more current for various reasons (euthanization, non-major packer slaughter) then many expect. If so, we might get a nice bump in hog prices. We can hope.

Sow Slaughter

The latest weekly sow slaughter was 69,753 the week before over 70,000. Last year’s weekly sow slaughter averaged 57,500. From Dec 1st to Feb 29th the USDA Hogs and Pigs Report indicated the U.S. sow slaughter was 35,000 higher than a year ago. In March-April this year U.S. sow slaughter per week so far higher than March-April last year (up 36,000 total). 

We sell breeding stock at Genesus. There is no doubt gilt sales have declined. Not only for us but for the whole genetic industry. Producers are protecting cash flow and concerned about the future. Lower replacements cut the breeding herd.

Our farmer arithmetic on this. Looking at breeding herd decline from Dec to June 1st (6 months).

  • Dec-Feb = 96,000 USDA report
  • March-May = 180,000 (low side estimate 14,000 a week avg.) or 260,000 (high side estimate 20,000 a week avg.)
  • Potential loss of Pig Production = 5-7 million head a year.

Wherever it ends up there are fewer hogs coming and we expect breeding herd liquidation will not stop June 1st. Could end up with breeding herd down 500,000 before all the dust settles.

U.S. Pork Export

It’s not hard to imagine that U.S. Pork Exports would drop when hog slaughter numbers have declined significantly over the last six weeks. Less Pork – less to Export. Also, the huge jump in Pork cut-outs that got over $1.20 lb. would have foreign buyers to take pause. The good news, it appears exports continue to run about 12-15,000 tonnes a week higher than a year ago (about 120-150,000 market hog equivalent). These types of numbers if they continue will support Pork cut-outs and hog prices as plants come into fuller harvest production.

Print Newsletter 🖨

Categorised in: ,

This post was written by Genesus