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The USDA September Hogs and Pigs Report indicated there was 5% more market hogs over 180 lbs. than a year ago. If that is the case, you would think current weekly U.S. hog marketing’s would be 5% higher? Last week was 0.4% year over year. The prior two weeks were much the same. Where are the hogs? You keeping them as pets? It isn’t that market hog weights are much higher than a year ago. Last week average weight 285 lbs. a year ago 284 lbs.
In July, October Lean Hog Futures were 68¢ lb., a terrible price that would have reflected per head losses of up to $35 per head. Thankfully the wizards that drive lean hog futures were wrong. Last Thursday the average National Hog Price (October) was 85.01¢ lb. The wizards were only out 17¢ lb. or $35 per head. Sometimes what is called smart money isn’t that smart.
The latest Iowa State University calculation for farrow to finish breakeven is 83.14¢ lb. We are as an industry on average near breakeven selling price 85.01¢ lb., breakeven 83.14¢ lb. A lot better than the futures wizards collective agreement of in mid-July of 68¢ lb. market price for October.
A reflection of supply and demand is the price of small pigs.
Last week prices $18-19 per head higher than the same week a year ago. DTN Agdayta calculated last Friday the current breakeven price to buy a 40 lb. feeder pig at $65.02, our observation over time is market moves to breakeven prices. We expect continued increases in small pig prices. There will be $100 per head feeder pigs in the new year.
On our recent Asian trip, we heard industry observations that GMO-Gene Edited Pigs would not be welcomed by government and consumers. North American Industry as exporter to Asia should take notice. U.S. exports 27%, Canada 70% of its pork production. It’s best we determine if the promised panacea of Gene Edited Pigs doesn’t become a nightmare to pork demand and market access. No Market, No Money.
Muyuan
Last week we met senior management of Muyuan, the world’s largest hog producer with 3.1 million sows. Have to say it’s mind boggling to think Muyuan is equal to half of U.S. production and almost three times all of Canada. Interestingly much of Muyuan’s management is what we would term smart young people with many in there 30’s even 20’s. Our North American industry management is much older. Maybe it’s because China’s industry has been dynamic evolves into production scale the last few years. It reminds me of the 90’s in the U.S., Canada. Building, growing. The reality is much of our current industry is still managed by the young who started in the 90’s, we aren’t young anymore. My son Spencer is 27, my observation there are few his age entering our industry. Where are the smart young people, we need for our industries future? There out there, what are we doing to get them?
Summary
Market hog numbers currently running over 4% lower than USDA projections, hog weights similar to a year ago. October Hog Price higher than expected. Small pigs $18 higher than a year ago. Are there fewer hogs? There has been continually this year lower hog numbers than USDA has projected. A reader recently told us of thousands of empty finishing spaces within 20 miles of his home, last year he says were full. The market usually jumps when no one expects it.
Left to right: Lyle Jones, Genesus China Sales Manager, Qin Jiangtao, Manager of Breeding Department for Muyuan Foods Co., Ltd, Jim Long, Genesus CEO, Zhu Hongqian, Director of Breeding Department for Muyuan Foods Co., Ltd, Bob Kemp, Genesus Vice President and Mike Van Schepdael, Genesus Vice President
