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The U.S. hog industry has its challenges financially the last two years with almost continual losses. While the swine industry suffered other parts of the ag community prospered with record incomes from high grain and oilseed prices. The huge drop in the prices for these commodities can be seen in the U.S. Gross Annual Farm Income projected by USDA for 2024.
A drop of 92 billion dollars in 2024 compared to 2022. The impact of lower income will be felt across the ag industry. Certainly, will be less farm equipment sales, at some point possibly land prices and rent will be impacted. You can’t drop income of billions without across-the-board impact.
Mexico
The price of market hogs has exploded in Mexico. The average price a week ago 50.90 Pesos a kg or $1.25 USD liveweight a lb. It’s almost double the U.S. price of 92¢ lean or 68¢ lb. liveweight. To put in perspective Mexico’s price that is 57¢ lb. higher than U.S. price on a 280 lb. market hog is $160 per head. We have done business in Mexico for thirty plus years and never seen a price spread so great. U.S. Pork Exports to Mexico will be strong for the foreseeable future as arbitrage will pull pork to Mexico. Why Mexico’s so high, months and months of financial losses lead to less hogs. It’s not as if Mexico’s consumers have suddenly started eating more pork. We expect record U.S. exports to Mexico over the next few months, supporting U.S. – Canada hog prices.
China
We were last week with large Chinese pork producer and Genesus customer. They reiterated the huge financial losses the China industry suffered over the last two years. Losses were in the aggregate at least $50 billion USD plus. Many sows went out of production. The Chinese government estimates -7% (-3 million). Some industry observers estimate liquidation is over 4 million sows. Whatever it is the results are less pigs and prices now over 19 RMB leading to current profits in the $75 per head range. The current price spread between U.S. and China are similar to Mexico – about $160 USD per head. We expect the higher prices in China will lead to increased pork imports. A scenario which will support hog prices in USA – Canada.
Gene Editing – GMO
The push to have Gene Edited – GMO pigs accepted by the industry and consumers is ongoing. Recently, we have had several discussions with several major industry participants throughout the world. Some very large players are saying thanks but no thanks. The concern with already challenged pork demand the industry can’t afford the risk to consumer demand and big resistance to Gene Edited – GMO pork. The only large-scale consumer survey we have seen was done by Iowa State University which indicated around 60% of women would be unwilling to eat and purposely avoid Gene Edited – GMO pork. If that isn’t a stop signal not sure what is.
It appears some genetic companies have programs to jeopardise pork demand while others focus on increasing demand with better tasting pork. Producers have choices to make.
Genesus Jersey Red Duroc x Genesus F-1 Pork
