Pork Commentary

 

Jim Long, President-CEO, Genesus inc.

August 1st, 2022

 

U.S. Hog Prices Stay Strong

 

Last week the U.S. National Carcass price averaged $122 lb. U.S. Pork Cut-outs closed Friday at $127.34 lb. reflecting good demand relative to supply. Other observations:

 

·         U.S. hog slaughter last week was 2,291,000, same week last year 2,313,000. Year to date U.S. slaughter is down 3.7%. Latest Iowa – S. Minnesota liveweights average 276.7 lbs. A year ago, same week 278.1 lbs. Lighter hogs year over year indicates a very current finishing inventory. This is positive in sustaining hog prices going into fall when seasonally hog prices decline.

 

·         Official June U.S. sow slaughter was 268,900, a year ago June was 269,100. Next to no difference. To the end of June U.S., sow slaughter is 70,000 less than a year ago. U.S. weekly sow slaughter is running currently in the 60,000 head per week range. Last Friday 450-499 lb. sows averaged $76.17 with highs of 88¢. Last August sows averaged in the 300-499 lb. range were 85.38¢ lb. In our opinion sow slaughter in the 60,000 per week, range indicates a breeding herd inventory with little change happening.

 

·         We have written over the last few months about the decline in Europe and the UK’s pig production. A recent report by Agriculture and Horticulture Development Board (AHDB) in regards to the UK market highlights some of the following.

 

o   UK sow herd was 415,000 mid-2021 is now forecasted to be 350,000 now. A decline of 15%.

o   Expectation hog slaughter to be down 15% year over year second half of 2022.

o   Current UK hog prices are 193.09 GBX/kg – the highest ever recorded. Unfortunately, with high feed prices, producers are still losing money. About £20 British pounds a market hog.

 

·         UK market and production levels going forward are in our opinion a snapshot of much of Europe. We expect the European sow herd will decline 1 million sows from its numbers in 2021. Less hogs coming leads to even stronger prices.

 

·         European Commission just released slaughter data from January to April 2022 – 4 months. Year to date EU hog slaughter is down 4.2% - tonnes of pork produced are down 5%. Less hogs, less pork. No wonder hog prices have increased. We expect year over year monthly EU hog slaughter to move towards 10% lower.

 

·         The ability of Ukraine to get grain shipped through the Black Sea now that there is a deal with Russia still seems to have some doubts. We expect some degree of success if it’s in Ukraine and Russia’s self-interest to get grain moving. Russia has a huge grain crop. Ukraine has lots to move also. We expect the backed-up grain from last year’s crop and the new crop will put pressure on global grain prices as it flows into the marketplace.

 

Summary

 

U.S. hog prices stay strong with no sign of more pigs well into 2023. Europe prices are at or near record levels with fewer hogs forecasted in the coming months. China prices have gained significantly (up $200 per head) since the first of April. Less hogs in the U.S., Europe and China. Collectively 75% of world’s hog production. We expect World hog prices to be excellent in the coming months due to less supply.

 

genesus.com