FEEDSTUFFS PRECISION PORK:
Hog prices take a hit
12-month profitability outlook PLUS a Cargill Pig Flash market outlook
A month ago, the general thinking was that May through August hogs would have a $35-$40 per head profit. Since then, live hog futures and cash hog prices have taken a hit. At this time, May is looking like a possible break-even month, and June through August is now projected at $13-$18 per head profits, according to the Cargill pork team.The US Department of Agriculture’s most recent prospective planting report and quarterly stocks report put corn acres at 92 million, which were the top side of the market estimates. The quarterly stocks report came in at 7.4 billion bushels, which was right in line with the average market estimate. Looking forward, the focus for the US will be shifting toward farmer planting and weather for the bigger corn-producing states. Parts of the Dakotas and Minnesota are posing early planting concerns due to snow packed fields, while some parts of Nebraska, Kansas and Texas remain dry looking for rain. Planters have already been in the fields even as far north as northern Illinois. Demand for corn will also be something to watch in the export market as well as domestically in the coming months. Over the last couple of weeks, sales to China have picked up a bit, with China stepping in to buy US corn. The question now will be if China continues to buy US corn and for how long, particularly with the South American crop coming to markets later this summer. Domestic corn demand for April is expect it to pick up a bit with ethanol demand historically coming online.The market for soybean meal this summer doesn’t appear to be super bullish. Conversely, this summer could be interesting with tight bean supplies, lower crush margins and possibly more downtime.Canola meal is mixed bag with some areas continuing to weaken, while others due to shipping issues or downtime, held.The distillers dried grains (DDG) markets have continued to weaken across the entire US. The northeast is expected to see ethanol plants take some downtime through April and May, which will continue to keep DDGs relatively overvalued compared to competing ingredients. The Midwest and northeast continue to battle toxin issues and the expectation is that toxins will continue to be a prevalent issue through new crop. Pig inventory numbers in the USDA's more recent Quarterly Hogs and Pigs report closely aligned with what most analysts had expected, except for farrowing intentions, pigs saved per litter and the heavier weight inventories.
U.S. hog producers intend to have 2.93 million sows farrow during the March-May 2023 quarter, a 1% reduction from actual farrowings during the same period one year earlier, and a 3% decline from the same period two years earlier. Intended farrowings for June-August 2023, at 2.97 million sows, are down 3% from the same period one year earlier and down 3% for the same period two years earlier.Pigs saved per litter also had analysts scratching their heads. The average pigs saved per litter was 11.02 for the December 2022-February 2023 period, compared to 10.95 last year, a 0.7% increase.Analysts also noted a change in the heavier weight categories. For the 120-to-179-pounds group: 14.973 million head (down 0.1% from 14.988); and for the 180-and-over group: 12.727 million head (up 2% from 12.468).
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