The activity in the last few days have been disappointing seems live hog futures, cash hogs and pork exports have shown some weakness. After 18 months of continual losses, we are looking for hog prices well beyond the breakeven of 88¢ lb. lean.
Some Observations
A year ago, Iowa – S. Minnesota lean hogs were 77¢ lb. Last week 92¢ lb. This year is $30 plus per head better.
U.S. cash corn average now $4.37 a bushel, a year ago $6.50. A cost of production reduction of about $20 per head.
U.S. Pork Export Sales continue strong with 36,210 MT last week. Year to date up 8% from last year and up 15% from two years ago.
Hog slaughter last week 2,406,000 down -1.9% from last year 2,452,000.
Weekly Pork Production was 519 million lbs. last week a year ago 530 million lbs. down 2%. Year to date pork production 9690 million lbs. a year ago 9683 million lbs. 0.1% higher. USDA projects an increase of 2.8% pork production in 2024 compared to 2023. In the first four months of 2024 it’s 0.1% higher. Farmer Arithmetic to get 2.8% higher for you we need to average at least 4% more year over year for balance of 2024. As if that’s going to happen. This week USDA will update their projections, wonder how much longer they will continue with their delusion.
The latest U.S. weekly sow slaughter was 63,965 and 2.6% of total slaughter. Both indicate to us when coupled with record sow mortality. Herd liquidation continues.
U.S. Pork Exports should continue strong. Europe the biggest competition has significantly higher hog prices making U.S. pork more competitive in global markets. USA is 67¢ lb. liveweight, Spain 1.80 Euros/kg = 87¢ lb. liveweight. 280 lb. pig 20¢ lb. difference = $56 head cheaper in USA. You are a buyer in Korea. Where would you buy from?
We have seen recent increases in corn – soybean prices – corn up 40¢ a bushel. U.S. crop plantings seem to be on schedule. Some areas delay because of rain. Some of the areas a couple weeks ago suffering from dryness. The jump in prices will encourage plantings. More crop better for livestock producers.
Was with a long time Genesus customer last week. Several thousand Genesus sows. Pen gestation. Average 4% sow mortality. No nurse sows. Next to no prolapses. Next to no boner sows leading to better sow salvage returns. Makes you wonder why producers tolerate 15% plus sow mortality, nurse sows, boner sows, prolapses, etc. Maybe misery loves company when on a paid trip to Nashville. Expensive trip in the end.
Governor Ron DeSantis of Florida signed a bill last week that would outlaw the manufacture and distribution of lab grown meat in the state.
“Take your fake lab-grown meat elsewhere,” he said. “We’re not doing that in the state of Florida.”
DeSantis made fun of liberal elites who advocate for “fake meat” as a way to combat climate change.
It’s good to see push back to support real agriculture. Coupled with collapse of demand for plant-based meat products and implosion of their companies share value. Some good news for livestock producers.
Summary
U.S. hog prices significantly better than a year ago. Feed costs lower. Exports higher. Pork supply year to date flat. We expect less pork coming months due to the relentless liquidation we have seen from record financial losses. In our opinion Lean Hog Futures are all undervalued compared to where hog price will be in each of those months.
