Brumm: Thoughts on Fall Market and Pig Supplies

By Mike Brumm

This past week I attended the Midwestern Section of the American Society of Animal Science annual meeting in Des Moines. This meeting has become the location for graduate students and faculty from around the US to present their latest swine nutrition research results. It also is a great place to meet and greet a large number of the pork industries allied industry members.

One question I repeatedly was asked at the meeting – my thoughts about slaughter capacity this fall. Will we have enough capacity to meet what many suspect will be record numbers of pigs coming to slaughter?

Our first real look at the potential numbers will be next Friday’s USDA Hogs and Pigs report. The November-February pig crop will be this summer’s slaughter with February born pigs mostly going to slaughter in mid-late summer. The March-May farrowing intentions will be the run-up fall numbers with May pigs targeted for October slaughter. The June-August farrowing intentions being the Thanksgiving ‘crunch’. Keep in mind that the pigs we slaughter in mid-late November come from matings that were done in mid-February.

Essentially slaughter numbers for this fall are pretty much locked in place already – all we can do is react to pricing opportunities.

One of the signals that I watch is the Friday USDA feeder pig report. How is the industry pricing weaned pigs that won’t be slaughtered until approximately 150 days from weaning? If we’re going to be long on pig numbers that would mean we should be somewhat short facility space in coming months and weaned pig prices on the ‘spot’ market would be falling at a faster rate than normal.

On the other hand, if we have excess finishing space, the ‘spot’ price should remain strong as producers look to fill existing facilities, even at prices that only cover variable expenses.

So far, weaned pig prices in the USDA report are relatively neutral in regard to this falls price and supply. Historically the ‘spot’ price declines to the ‘formula’ price around mid March, with further declines until mid summer when it once again begins its yearly climb. This week the ‘spot’ SEW average price was $42.66 per pig while the average ‘formula’ price was $40.90. The lowest price paid for a set of pigs was in the spot market further suggesting this market is behaving in a traditional and seasonal manner.

Source: MNPork