After about three years of not growing litter sizes, the recent hogs and pigs report released by the USDA showed a record number of 11.53.
Steve Meyer with Ever-dot-Ag says that was the market mover: productivity. However, with third and fourth quarter numbers getting pretty large with productivity increases plus greater than expected farrowing intentions, he thinks demand is carrying the day.
“I’m a little concerned about the third and fourth quarter numbers relative to packing capacity, especially with the closure of the Tyson Perry Plant, so I think the remarkable thing about the report is we went through what on paper was the worst year ever for 23 and we haven’t cut back supply.”
Producer costs have also gone down dramatically, last year $97 on carcass, and right now about $86 according to Meyer, who adds his numbers have turned positive at two dollars per head, whereas last year it was minus $27.
Local hog marketings are already set so the number of hogs won’t change. When it comes to price, as capacity contracts, Meyer says the buying power goes into the hands of packers leading to low spot hog prices.
“Now many producers have at least part of their price tied to the cutout value, and that wholesale demand situation is one of the reasons you see strength in the summer future. Is wholesale demand looks excellent driven in part with very good exports and we think those are going to continue.”