Jim Long Pork Commentary, U.S. Hog Price Makes Strong Move, July 30th 2019

By
Jim Eadie
-

Jim Long, President and CEO Genesus Genetics

U.S. Hog Price Makes Strong Move

Last week the average 53-54% lean market hog in USA went from 71.79 to 77.96¢ lb. A 6¢ lb. increase or $12.00 per head. Certainly, going in the right direction. We expect to see the average price in the 80’s by the end of this week. Nice to see the industry could use making some money.

At the end of last week, the average of the next twelve months lean hog futures are 84¢ lb. A profitable scenario.

China Hog Price Evolution

Week of

Jan 30, 2019

12.23 CNY kg

82¢ U.S. liveweight lb.

May 22, 2019

14.96 CNY kg

$1.00 U.S. liveweight lb.

July 17, 2019

17.84 CNY kg

$1.20 U.S. liveweight lb.

July 29, 2019

19.06 CNY kg

$1.28 U.S. liveweight lb.

It’s not hard to see the increase in China hog prices. A 250 lb. hog is now almost $120 per head higher than the end of January. Since the end of May $70 head higher. We expect the China hog price to continue to go up over the coming weeks. $1.50 U.S. a lb. is not out of the question. The $120 per head increase is obviously an indication of lower pork supply.

Other Observations

  • Got some push back on our concern in last week’s commentary that Gene Editing – GMO could hurt pork demand. Some passionate readers that don’t agree. They believe technology will trump consumer reluctance. Maybe but we wouldn’t bet the farm on it. Just give our business to plant-based meat products?
  •  More Chlamydia in gilt stories last week. Now hearing of gilts not only not breeding but being blind. Some experts speculate it could be more than just Chlamydia, it appears there is little consensus on what solution other then maybe de-pop. Some are speculating could be genetic. Whatever the case getting blind gilts that don’t come into heat is a big problem. Not exactly the recipe for high production.
  •  Wonder how China hog price can go. June 10, 2016 China Average Price was 20.80 CNY/kg. That is $1.40 U.S. liveweight a lb. Obviously China consumers have paid high prices for pork before.
  • We were in China’s Sichuan province in Mid-May at that time the province had seen little ASF. Since then the province that produced 67 million pigs in 2018 (half of US production) had hell break loose. Some estimated the pig inventory of Sichuan has declined 70% since May. The 19.06 CNY/kg ($1.28 U.S. lb.) national price has much upside.
  • U.S. Gross Packer Margins to the positive are next to non-existent. Business cycle is alive and well. Packers have gone from the best margins in their history to not having any fun. High Profits expanded packer capacity beyond hog supply. Packer Margin decrease has led to more money for producers.
  • Beyond Meats (fake meats) announced a loss in there second quarter of $9.4 million on sales of $67.3 million. Beyond Meats yesterday also saw its shares drop from last Friday’s stock value of $239.71 to $192.61 a drop of over 20%. Is Beyond Meats the bitcoin (fake money) of the fake meat industry? Also, yesterday some of the executives of Beyond Meat announced they were selling a significant number of shares? Why?
  • To put in context despite all the media hype, Beyond Meats is weanie compared to Tyson Foods who did approximately $10 billion sales a quarter. Beyond Meats is of 1% in revenue of Tyson. Also, Tyson makes over $750 million a quarter while Beyond loses money. Time will tell what shareholders selling out at Beyond Meats sure indicates there great belief in the great Beyond. Below are some real good perspectives on Fake Meat. Send them to everyone you know.

wellness.consumerfreedom.com
Chemicals Lurking in Plant Based Meats

Summary

Cash Hog Market showing strength. Lean Hog Futures showing positive gains. China Hog Market highest price since 2016. We expect to see continued China price appreciation. Won’t be surprised to see highest hog price globally ever before dust settles.

Producer Success Story using
Genesus genetic line 

Geraldine and Lee Chaferr, Grange Farm, UK 

Geraldine and Lee Chafer run a 300-sow farrow-to-finish unit

 

WHAT THE JUDGES SAY

 

“With a lot of focus, hard work and determination, the Chafers have established a thriving and profitable pig business with just a £10,000 investment. Their genetic line (Genesus) means they have phenomenal production figures.”

 

If there is one couple who know what they want and will achieve it, it is Lee and Geraldine Chafer. Sheer hard work and determination has allowed them to turn an initial £10,000 investment five years ago into a profitable and thriving 300-sow farrow-to-finish business.

 

Their initial investment was in a 1,200-sow outdoor herd producing weaners for Tulip.

However, being tied into a strict contract and with a 90-minute commute each way from the farm, the couple decided to sell it and establish their own outdoor sow herd.

 

In 2018 they set up a 300-sow outdoor herd at Grange Farm – a 28 ha farm they started renting back in 2016. They built an additional 1,600 weaner spaces to finish all the pigs themselves.

 

THE NUMBERS

  • 15 live-born piglets a litter
  • 12 Number of pigs weaned a litter
  • 96-100 Conception rate (%)
  • 2% Finishing mortality
  • 2.24 Feed conversion ratio
  • 700g Daily liveweight gain (7-45kg)

 

Management

  • The five-week batch-farrowing system has been designed with the intention of labour efficiency and staff needs in mind. Currently, only Lee and Geraldine work on the farm, with some relief help at busy periods.

  • All dry sows are fed with electronic sow feeders, meaning they only need to go into the field once a week to feed.
  • Many outdoor units have failed to get electronic sow feeders to work, but the Chafers’ commitment to training gilts to use the feeders means they work well here.
  • Lee says: “The theory of electronic sow feeders are great. It means you are not driving a tractor around and disturbing the land. It manages their weight, as they are fed a specific ration, and it saves time, as you only have to fill the feeder once every seven to 10 days.”
  • All gilts and sows are EID tagged, so they can be individually fed using the electronic sow feeders. Lactating sows are fed using ad-lib hoppers in individual paddocks that only have to be filled every two weeks.
  • The sows are housed in plastic, spherical pig arcs that are designed to outlast wooden and metal huts. Furthermore, the spherical shape makes them easier to clean, as they don’t have corners.

 

Production

  • When the pair established the herd, they opted for the highly prolific Genesus breed line, which combines Large White and Landrace genetics.
  • Growth rates in the finishing herd are phenomenal. Piglets are growing 700g a day from weaning until 45kg and their growth ability means they are selling pigs at 14 weeks weaned at 110kg deadweight.
  • Feed conversion in the finishing herd stands at 2.24 and mortality about 2%.
  • Their prolificacy also means they have high born-alive figures, with some litters containing up to 15 piglets.
  • Conception rates and farrowing rates are also high, at between 96-100%.
  • All pigs are finished inside on straw bedding and are sold as RSPCA-approved, outdoor-bred pork to Karro Food Group. Their contract with Karro means all pigs must have entire tails and no teeth clipping is allowed.
  • Each finishing pig has more than 1m space, which is more than the RSPCA Freedom Food standards of 0.8m per finished pig.

 

The future

 

Although the business is still in its infancy, Lee and Geraldine are already looking at how to take the enterprise forward. In the next two to four years, they aim to be wholesaling their own product to add value to their pigs.

 

Lee says: “We don’t have a plan in place yet, but we want to be adding value to our product and not have all our eggs in one basket.”

 

THE JUDGES LIKED…

  • The system design, which reduces the need for staff on the farm
  • Clear focus on where the couple want to go
  • High welfare across the entire farm
  • Excellent growth rate figures

FARM FACT

  • Established initially with a £10,000 investment
  • Recently sold 1,200-outdoor sow farrowing unit and set up their own 300-sow farrow-to-finish unit
  •  28ha tenanted farm

 

source: Farmers Weekly UK / July 2019

 
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