Weak Exports Kill Hog Prices
USDA estimated the week's hog procurement at 2.389 million head. That includes a 435,000 and 96,000 head run for today and tomorrow.
This is relatively close to our 2.398 estimate which is not bad for a snow day. This week's run would total 1.2% over last year. The past four weeks have run 1.7% of last year.
There was a little shortfall in this week's run, due to weather. That is a part of this week's sharp 4.65 price break on the April, but likely not the major driver.
In this same discussion is the weight issue. Thursday's weight report, covering the week ending January 27, showed barrow and gilt weights 0.5% over last year. That covered nationwide numbers. Wednesday's Iowa/Minnesota report for the week ended February 3, showed a 1.3% increase. Either way, we are not back to current.
A big driver for this drop in pricing is the export situation. Yesterday's weekly pork export sales report was just plain bad at 7% under last year. This continues the poor pace noted for five weeks in a row now.
Year to date sales are 1% under last year at this time. Look at what happened the week after 2018 rolled over on the CME futures charts, lower trade began. USDA sees whole-year exports at 5% over last year. Our number, from the AgLeaders Conference, is 4% over.
Though USDA's changes on the pork balance sheet were slightly supportive yesterday, USDA is still using production estimates that are just too large. They lowered the 2018 pork production forecast by 75 million lbs. to a total of 26.885 billion. This is still a little larger than every private estimate you are going to find. It would be 5.1% over last year. Their Q1 - Q3 estimates are not too bad but the big question is about their 7.0% over last year estimate for Q4. Allendale holds a more moderate forecast at 26.433 billion, 3.0% over last year.
We expect the year to average $72 per lean cwt. The February is seen at $71 and the April at $72. June through August are pegged from $80 - $84. At a minimum, all hog producers should have corn locked in for the year after our outlook conference on January 24. We are very interested in buying this discounted market. Based on our earlier attempt to buy, with a stop filled quickly, we'll stand aside for now. RN
Rich Nelson Allendale Inc. 815-578-6161
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