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It continues to amaze us that the USDA could get the September 1st swine inventory so wrong. USDA projected 5% more hogs year over year in the 180 lb. and over category. Now for the fifth consecutive week in a row U.S. marketing’s have stayed close to the prior year. Last Week 2,613,000, a year ago 2,616,000. If there was 5% more the increase would have been more than 125,000 more head.
If there were more hogs as USDA stated you would expect heavier weights year over year, as we would be backing up hogs. Last week USDA results 286 lbs., last year same week 286 lbs. No change.
On September 1st USDA projected the weight category of 120-179 lbs. to be 3% higher than a year ago. We are starting into these hogs now.
The marketplace is responding to the reality of less hogs than projected. The National Average hog price continues to hover around 83¢ lean lb. It seems to be there for weeks and certainly a lot better than the mid 60s October lean hog futures we’re in July.
Pork demand appears to be okay as U.S. Pork cut-outs Friday closed at 96.41¢ lb. Similar to times this past summer despite the increased seasonal fall marketing’s in the 2.6 million head range. Up 200-300,000 head per week from summer marketing’s. Pork cut-outs are being helped by the other red meat Beef cut-outs at $3.20 lb. Making beef three times the price of pork which pushes value buyers to pork. Also, a sad testament to our failure to produce pork that will compete with beef on taste. If we could get to half the price of beef, that would be pork cut-outs $1.60 LB or $140 a hog higher. Sad but true.
Pork exports are also helping prices. The latest weekly pork export report indicates a record week to Mexico at 19,950 metric tonnes.
U.S. pork sales the last three weeks of 38,000 MT, 50,600 MT, 42,000 MT are the best combined three weeks this year. Moving pork out of domestic pork is supportive.
Next 12 months future profit potentials have certainly got better. Last week using lean hog futures, grain futures, profit estimated at $16 USD, in mid-July 12 month calculation it was a loss of $2 per head.
If there is a canary in the coal mine in the hog industry, it’s the cash small pig price. Cash early weans average last week $45.58, a year ago $24.06. 40 lb. feeder pigs last week $61.61, year ago $35.85.
Certainly, year over year higher small pig prices being aided by lower feed prices but it’s also a reflection of less pig supply in our opinion. It’s the same number of barns chasing the pigs. DTN breakeven calculation last Friday calculates you can pay $71.59 for a 40 lb. feeder pig that goes to market in February. We expect to see a continual increase in small pig prices in the coming weeks. There will be $100 feeder pigs.
China
It’s being reported utilizing China National Bureau of statistics that China slaughtered 520.3 million hogs in the first nine months of 2024, down 3.2% (-16 million head).
China’s sow herd in August was down 4.8% from a year ago at 40.36 million (- 2.2 million sows).
The price of hogs in the third quarter that have ranged from 17-21 RMB kg in the quarter has led to the first profitable quarter in over two years.
We will report more China observation in next week’s commentary as Spencer and I and other Genesus team members will be in Chengdu, China for the Leman Swine Conference. Spencer will be speaking on opportunities he has seen from Better Tasting Pork (Genesus).
