Two weeks ago, we had a week of hot weather. The result Iowa – S. Minnesota weights went from 278.3 lb. average to 274.3 lbs. a decline of 4 lbs. average in one week. We suspect this is one of the largest weekly declines ever.
We don’t think the 4 lb. decline was just because of the hot temperatures. We believe the declining hog price is because producers pushing hogs to market, they get ahead of the ongoing price drop. We also observe Packer owned hogs average weights are in similar weight range 275 lbs. They were in the 290s in April. It appears to us to keep the chain speed at desired levels Packers are pulling hogs at lighter weights. A positive sign of Pork demand.
The latest weekly U.S. sow slaughter was 66,140. Our Farm Arithmetic indicates 58,000 a week is a stable sow herd. We continue to liquidate the herd.
In the week of very hot weather, we have reports that several sow herds had significant sow mortality due to the heat. Some reports of up to 5%. If the heat knocked 1%, it would be 60,000 sows gone. Less pigs coming.
Our observation on gilt sales and competitor pricing tells us gilt purchases and retention is at levels that would indicate an ever decreasing sow herd. With industry sow mortality average at over 1% per month it takes effort and money to sustain a breeding herd to capacity. We believe many herds have fewer sows then what would be capacity.
The average U.S. National Corn Price last Friday was $4.76 a bushel. The lowest price in almost 2.5 years. Certainly, a long way from $8.00 a bushel we touched in 2022. The lower feed price is lowering the cost of production for Pork producers. It’s cutting losses, not making profits.
There are currently locations in Brazil with corn at $3.75 – $3.80 USD a bushel. Brazil has record corn crop. The Brazil pricing will keep pressure on U.S. corn prices and continue to lead to ongoing U.S. corn exports.
The USDA is projecting more Pork produced in the U.S. in 2024 than 2023. We don’t agree. Sow liquidation will cut production, it also will cut corn demand. There will be less cattle in 2024, maybe no more chicken i.e., less corn usage for livestock – poultry?
U.S. Pork exports are 8% higher year to date. A week ago, sales of 36,890 MT was highest in 16 weeks. With Europe’s supply of Pork lower and hog price higher we expect U.S. – Canada to remain higher year over year.
GMO – Gene Editing
- What will be consumer resistance to GMO – GMO Edited Pork? We are struggling already for 25 years with a flat line per capita Pork consumption. Our lack of profitability is affected by our inability to get paid for Pork anything close to Beef. I.E., Beef cut-outs 3 times Pork.
- Iowa State (certainly ag friendly) did a survey. Around 60% of women surveyed said they would be unwilling to eat and purposely avoid gene-edited foods. A red flag in our opinion of not going down a path to total demand destruction.
- Mexico the U.S. largest importer of Pork have legislation in place to restrict imports of GMO – Corn. Why wouldn’t Mexican Pork producers push for similar legislation on GMO – Gene Edited Pork? Their interest stoppage would push Mexican hog prices significantly higher. Meanwhile the lowering of imports to Mexico would crush U.S. Pork prices.
- What are Packers wanting to do? They don’t want to have further impediments to Pork demand or have to defend GMO – Gene Edited Pork to retailers, consumers. We had Packers tell us they are not sure about using GMO – Gene Editing. Until there is a legal GMO – Gene Edited pig all can kick the can down the road.
- In China we are hearing resistance to GMO – Gene Editing from major producers fearful of consumer acceptance. China is the world’s largest importer of Pork. If major producers resist its use, what chance is it that certification of no GMO – Gene Editing will be part of import business? China decided on no Paylean, it was not an issue for anyone else. China alone ended Paylean use, one customer.
- Retailers and Foodservice have no incentive to support GMO – Gene Edited Pork. They would be on the frontline to explain to the 60% of women in the Iowa State survey found that are unwilling to eat and purposely avoid gene-edited foods. All it takes is one company be it Walmart, Kroger, McDonald’s etc. to say no GMO – Gene Editing and the rest will follow. What will you do if you have GMO – Gene Edited pigs and there is collapse in demand and price? It’s not Paylean where you can stop immediately. Russian Roulette?
Yevgen Shatokhin, Genesus Official Representative in Ukraine and Kazakhstan:
+380 (50) 444 2633