USA: Week 27 Pig Market Review 2021

As of July 9, 2021, the USDA reports that the average cost of pork products in the US market has fallen by $0.45. Over the past week, there was an increase in prices only for a picnic (+$3.2), ham (+$5.87) and bacon (+$3.93).

Recently, Allan Bentley, sales representative for GENESUS Genetics, provided an overview of the US hog market, noting that hog futures will rise in price.

Allan Bentley: “Now as I write this review, we have a positive basis (the difference between the prices of the futures contract and the underlying asset) of +$10.00! I'm not sure I've ever seen anything like it this time of year. When I was buying slaughter pigs, I used to put a basis on the chart, it was a predictable tool that indicated the direction of the market. If, on the actual basis, the cash price is higher than the futures price, they are merged.

What will it give?

* In my opinion, the information coming from CHINA that there is an oversupply of pork in the country and prices in their domestic market for slaughter pigs have fallen, against this background, one can say “for the company”, futures in the American market also decreased. By the way, China in its news releases is not entirely truthful and does not provide factual information. So, what, by and large, does the union of the basis give? Well, we only have the following facts:

* PRRS 144 is a real problem. This is not a PRRS variant that veterinarians can really take control of and stabilize the HEALTH of the flock. I heard about 25,000 sows - eventually the veterinarians gave in and in order to get the PRRS situation under control, the decision was made to get rid of all these sows completely. When veterinarians admit defeat from PRRS 144, we have to admit - we have big problems.

* Rising feed costs and rising construction costs for new pig farms have virtually halted any expansion. Everywhere you can see advertisements for the lease of feedlots.

* MEAT processors are losing money, but still making every effort to purchase pigs on the open market, and all this takes place in the summer.

All these facts tell me that the drop in futures over the past two weeks was not only excessive, but unnecessary. A positive basis confirms my theory. Prices in cash transactions will return futures to the same levels as three weeks ago. The meat processor I used to work for always made me write at the end of each of my comments that it was my personal opinion, not the company's. So, I decided to do it now. Cash prices will remain high and futures prices for slaughter pigs will rise.”  

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Average price for pigs

Negotiated price

Price in carcass weight

Price in live weight

National based LM_HG203:

-price range ($)

- weighted average. price

-Change from the day before

-volume of sales

106.00-117.00

111.86

+2.04

9470

82.00-86.50

85.05

+0.83

276

WEEKLY WEIGHTED AVERAGE PRICE FOR PIGS

Weekly approximate volume of slaughter of pigs, thousand heads

PORK PRODUCTION