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After trading in mid to high 90’s for several weeks it’s good to see U.S. Pork Cut-outs in the $1.05 range. This has pulled lean hog prices from the mid 80’s up to 93¢ lb. If breakeven farrow to finish 87¢ lb. we have profits around $10 per head.
The fact U.S. Pork Cut-outs can be in the $1.05 range is really positive with weekly marketing’s at nearly 2.450 million. There is no shortage of pork, we expect continued strong export demand especially from Mexico is supporting the cut-outs. Mexico’s hog price is over $1.20 U.S. liveweight a lb. reflecting lower hog numbers and a magnet for U.S. pork exports. It also doesn’t hurt Pork sales that Beef prices continue at a pace three times Pork ($3.15 lb. Beef cut-out, Pork $1.05). It’s too bad we won’t (we can) produce better tasting Pork to get prices closer to Beef.
OECD – FAO
The OECD – FAO has released there expected world pork production from 2024-2033 (10 years). This is interesting challenge to undertake when as an industry we seemed to be challenged to know next year let alone 10 years. Some observations.
- Global pork production is projected to increase 7.6% over the next 10 years. Going from 121.7 metric tonnes to 131 metric tonnes.
- The areas projected to have increased Pork consumption are Latin America 20.2%, Asia 8.5%, North America 8.2%, Europe is projected to decline -2.4%.
- In regard to Pork production over the next years Asia up 4.8%, North America 2.6%, Latin America 3.8%, Africa 3.1%. Projections has Europe declining -3.1%.
It’s obvious the OECD – FAO sees continued decline in Europe’s Pork Production. There projections are on top of a decline of 7% which already has happened.
- U.S. pork production was 23,203 million lbs. in 2013, 10 years later 2023 it was 27,318 million lbs. An increase of 17%. The next 10 years FAO projects an increase of 2.6% in North America. Certainly, a lot lower, reflecting continued pork demand issues in an increasing larger population?
- The challenge of any projection especially one so far out is the events that can happen I.E. African Swine Fever, Covid, High Feed prices, low feed prices, etc.
- The world population is estimated to be 8.118 billion this year. In 2033 its projected to be 8.748 billion. An increase of 7.7% in the 10 years. FAO’s projection of a 7.6% increase in Pork production is in line with projected global population growth. This would reflect flat per capita Pork consumption. What as an industry are we doing to increase consumption?
- Cash National Corn price at $3.77 a bushel is lowest it’s been in about four years. Of note, cash corn in North Dakota – Minnesota market is $3.31 a bushel. The last time the U.S. had 15-billion crop year, corn averaged $3.65 a bushel. If current crop projections are correct and another 15-billion-bushel crop rolls in, it’s not hard to expect corn prices to stay in the $3 to low $4 range.
Seems lots of angst over the short positions of professional traders in the corn market. We are not convinced the futures trade is a positive for ag producers. In the pork industry almost every market in the world has higher prices and doesn’t suffer whipsaw price gyrations like we see in the rumour and computer trading of U.S. futures.
