As we wrote last week Farrow to Finish Pig Producers are not having much joy!
Average losses are in $15-$20 per head range. The reality of the more hogs you have the more you lose comes to mind.
- June Lean hog futures have slipped from 85₵ at the end of November to 76₵.
- 53-54% Cash lean hogs are at 57₵ lb. A year ago they were 73₵. A $30 plus per head difference. All in the wrong way.
- Current lean hog futures don’t calculate to farrow to finish profits before May.
- A week ago U.S. sow slaughter was 66,196 (2018 Jan-Nov average 57,000). A real big number, a number that needs to be watched, a number that could mean liquidation.
- The U.S. government shutdown has delayed some regular swine reports. It will be interesting what they show when they do come out.
- The Tariffs from Mexico and China on U.S. Pork is biting prices. Hams and pork still go to Mexico but at a lower price to compensate for the tariff. China tariff helps other countries to outsell U.S.
- Last week there were U.S.-China trade talks. Also discussion re E.U. on metals tariffs. It would be quite helpful for U.S. hog producers (Canadian also) if trade talks could get pork tariffs resolved.
- We expect tariffs are hurting U.S. and Canada hog prices in the $20 per head range. (Canadian hog farmers get U.S. hog prices less basis)
Maybe we need to be thinking of demand not just supply.
Read an article this week where the comment on prices and pork demand was why not “Make loin less tasteless”
Meat Cut out’s Feb 1, 2019
Not hard to figure beef cut-outs 3.5 times Pork Cut-outs.
Hams and Loins dragging down Pork Cut-outs. Bellies are at a price almost equal to beef (204 versus 213) Tells us it’s about taste and flavour.
Maybe at some point our industry will figure out taste-flavour are huge drivers.
That’s beef edge, we have it in Bacon.
Pigs into Chicken (PIC) the other white meat did not work. Price points tells us the truth.
We need to add marbling- taste flavour to loins and hams. It can be done, it will be driven not by farmers or packers it will be food service retailers who push for a better product for their customers. Our ultimate customer is the eater.
The eaters are paying four times the price for belly than ham, 3 times more than loins. We chase pennies in production when we miss the dollars that a better product would lead to in demand. Taste-Flavour should not be a niche product.
Have to say it’s an emotional subject for us after twenty years
This past week the Wall Street Journal had an article on how African Swine Fever (AFS) is cutting the need for soybeans in China.
Obvious China’s inventory in December dropped over 35 million head year over year. Equal to half U.S. inventory. If half of U.S/ swine inventory disappeared so would soybean and grain demand.
Wall Street story also said ASF was hurting Pork Demand in China. We disagree Sichuan Province Hogs are $1.25 U.S. live weight lb. Obviously consumers paying for the pork.
Other Chinese areas are lower priced in hogs avg. (93₵ U.S. lb.) but prices haven’t rebounded in these areas so far because of continued liquidation and pork coming onto market.
Main point- Chinese are still eating pork.
Also story last week of a large producer China about 100,000 sows running out of feed for their pigs. Means running out of money. China liquidation is still happening at historically high levels.