Pork Commentary, May 14, 2018
Jim Long, President-CEO, Genesus Inc.
For the U.S lean hog price to go up it must be led by USDA Pork Carcass cut-out. A week ago the cut-out averaged 68.61¢ lb, last Friday it was 73.47¢ lb. Its going in right direction, we expect cash lean hogs will follow the cut-outs higher.
U.S Hog slaughter last week was 2,313,000 up 47,000 head from same week a year ago. With new extra packer capacity in place that can handle over 125,000 more head per week or 25,000 more per day. The extra capacity can be seen in daily kills. Last week this year Monday to Friday averaged 454,200 per day, last year same week the average was 436,000 per day. The increased daily capacity has dropped Saturday slaughters. This year last Saturday 42,000 a year ago 85,000 on the same Saturday. What we got is more hogs per week but less slaughtered on Saturdays. We expect within the next 4-6 weeks Saturday slaughter will be next to nothing. We will then find out how much the U.S pork cut-outs can jump and see the lean hog prices chase it higher.
China National Statistics shows the China pig inventory is 415.23 million hogs. The average national price for market hogs for the first quarter of 2018 is 10.11 yuan/kg (72¢ U.S lb. liveweight). Losses per head are in the $30-40 U.S range. We expect a significant amount of planned Chinese expansion will be put on hold. Indeed we know of some of these such projects suspended. Lower hog prices in China (relatively) will limit pork imports from other countries which in itself doesn’t support global pork prices.
This coming week we will be at British Pig Fair, which is held every two years. We will report our observations in next week’s commentary.
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