Jim Long Pork Commentary, Supercharged Profits, September 23rd 2019

By
Jim Eadie
-

 

Jim Long, President and CEO Genesus Genetics

Last week we attended and exhibited at the VIV-China.
Take home message- If you have pigs in China, Prices are very Good!

  • 13 lb. isowean: 1100 rmb or $150 U.S.
  • 36 lb. feeder pig: 1500 rmb or $205 U.S.
  • Market Hog price: 3120 rmb at 280 lbs. – $427 U.S.
  • Profit per hog: 1600 rmb – $219 U.S.

We all remember PED – we lost 7% of our pigs as an industry. Most had the most profitable year ever due to high prices. It’s kind of bizarre ASF for many in China is like a super charged PED re:  profit.

$200 plus per head- if you are down 50% in production in China but still have 50% to sell it doesn’t take a computer or ag-economist to figure you are still making good money.

In USA-Canada we are fortunate not to have ASF but unfortunately we are producing pigs under the cost of production. No wonder there is next to no new sow barns being built in U.S. but in China many new sow barns under construction.

The amazing thing about Chinas prices is the fact the sow inventory continues to decline. The price of pigs and market hogs probably has further upside due to the lower sow inventory compared to where it was 9 months ago, that is producing today’s market hogs. Probably in the 9 months’ time period China lost another 8-10 million sows? This dog has not hit the end of the chain.

Last week U.S. early wean pigs averaged $31.13 up $5 from the week before.  We will probably see continued increases over the coming weeks as we move towards higher monthly lean future prices.

40 lb. Feeder pigs averaged $39. U.S. last week. These prices are below break-evens for finishers.  The small pig story, from feeder pig brokers; pricing is being suppressed by lack of positive psychology, profits and limited finishing space. We expect if the market attitude and profits improved so would space availability.

We expect finishing capacity is at seasonal maximum inventory.

Last week U.S. was marketing 488,000 hogs a day. Doubt if 488,000 a day small pigs are being placed for March marketings. That will increase space and then demand.

Get acquainted with the
Global Mega Produce

A program of recognition led by National Hog Farmer sponsored by Genesus Inc.

New Hope Group

New Hope Group recognized as a Global Mega Producer for 2019.

New Hope Group, founded in 1982, more than 600 subsidiaries and branch companies with nearly 70,000 employees located in more than 30 countries and regions around the world. New Hope Liuhe Corporation Ltd., was established under New Hope Group in 1998 and became a listed company in China’s Shenzhen Stock Exchange the same year.

New Hope Liuhe is focused upon the development of food and technology within its wholly integrated chain of feed + livestock production+ slaughter processing and food production. Liuhe is China’s largest animal feed manufacturer with over 200 mills producing 26 million metric tons per year. New Hope Liuhe is also a leading poultry supplier with an annual capacity of 0.8 billion broilers.

In 2017 New Hope Liuhe announced a great expansion into hog production which is now a major focus. Today New Hope Liuhe is one of the largest hog slaughtering companies in China producing 3.5 million slaughter pigs in 2018.

New Hope Liuhe has aggressive expansion plans and increased its sow’s capacity from 100,000 to 160,000 in 2018. It is expected to reach 300,000 sows by the end of 2019.

Let’s recognize New Hope upon their outstanding accomplishments as a Global Mega Pork Producer!

  Photo: Left to Right:

Lyle L Jones, Genesus Director of Sales China
Ji Chongxing, New Hope Vice President
Mike Van Schepdael, Genesus Vice President
GU Yaping, Genesus China General Manger
Zhikai (Kyle) Zheng, New Hope Senior Research Scientist

 

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